Aura Minerals Inc. is setting up for a trade

Nov 18th, 2011 – Comment

The lower resource estimate reported on November 10, 2011 is already baked into the mix so we might just be at a point where all the bad news is out.


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Aura Minerals has been hit with a lot of problems as of late. Is it a strong enough company to survive and make a comeback ?

With thanks,

Stew

 

 

 

Hi Stew,

This will be the third time I have run the charts for Aura Minerals Inc. (ORA TSX). The first was on April 13, 2011 when the shares were trading at $2.53. It was advised that the stock could catch a bounce off of a double bottom which it did creating a nice trading profit but not a sustain advance. The second time was on June 29, 2011 when the stock was trading for $1.89 and it was noted that ORA was struggling to hold onto support. Unfortunately the shares continued to decline.

Another review of the charts will provide some guidance as to the go forward proposition for ORA.

 

 

 

The three year chart tells the tale of  declining asset value that started in March of 2011 as the shares failed to hold support at $3.50. Prior to the breach of support a death cross formed in February signaling that selling momentum was building up a head of steam. What you should also note is that every attempt to advance has been met with resistance along the downtrend line.

 

 

 

 

 

The MACD has proven a reliable indicator on the six month chart. It generated  a sell signal in September at $2.20 and a buy in October at $1.10. Currently the RSI and the MACD are trending higher suggesting a further lift off support at $1.10.

 

ORA has been a real grist mill for investors who adhere to a buy and hold philosophy. Traders on the other hand have had opportunities to score on the extreme swings. What is also visible on the chart is a double bottom which would suggest that the bounce off $1.10 has more to give.

The shares of ORA traded for a high of $10.00 back in 2008 and the company actually produces gold although at a fairly steep cash cost per ounce. In their Q3 report released on November 14, 2011 the company reported holding $20.6 million in cash. That should give the new CEO a cushion to work through some of the challenges that have surfaced. The lower resource estimate reported on November 10, 2011 is already baked into the mix so we might just be at a point where all the bad news is out.

ORA is not a buy and hold stock but it does look like there is a trade setting up.

 

Make it a profitable day and happy capitalism!

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