Northern Dynasty Minerals Ltd. has to hold support at $8.00

Jun 17th, 2011 – Comment

The best case scenario would be for the stock to catch a bounce off of $8.00 and start to build a base. If

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Dear Lou,
Could you kindly comment on Northern Dynasty Mineral(NDM.TO) when you are free.

Thanks very much.


Hi Binh,

Northern Dynasty Minerals Ltd. ( NDM TSX) is sitting on a significant copper, gold, molybdenum deposit in southwest Alaska called the Pebble Project.  They have two mining giants involved in their efforts, Rio Tinto, and Anglo American. The biggest challenge in the development of the project is that its located in an environmentally sensitive area.

Bristol Bay is one of the world’s premier fishing grounds and you can bet that it will take great effort, money, and time to overcome concerns about how mining and fish habitat can coexist.

Lets consult the charts for a review of the past and anticipation of the future.

The three year chart outlines the pop and the drop the shares experienced as it broke above resistance at $10.00 in November of 2010. The stock ran to its all time high near $21.00 in February of 2011 but there were signs that the run was coming to an end.

Both the RSI and MACD generated strong signals in February that it was to take some money off the table as the buying momentum was starting to lose steam. Currently NDM is trading at $8.30 which represents a 60% retreat from the high.

The six month chart traces the decline that started in early February with the RSI slipping out of overbought territory and the MACD crossing below the signal line. The lesson that we can learn from a chart like this is that there were plenty of opportunities to get off the ride to preserve capital or protect profits. Book profits when they are available because on many occasions they are not.

The best case scenario would be for the stock to catch a bounce off of $8.00 and start to build a base. If $8.00 doesn’t hold then we might have to test support at $7.00.

NDM has a long path to travel before it actually starts to bring ore to market from their operations at the Pebble Project. All along that journey the stock will provide many trading opportunities.


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