Lake Shore Gold Corp. meeting lots of resistance

Nov 28th, 2011 – Comment

If you were to be a buyer at these levels you would be swimming against a strong tide. I would say that patience would be the better part of valor.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hey Lou
My question is on Lakeshore gold and if I should be buying at these prices.

Also when are you coming back to television?

Thanks,

Dan

 

 

Hey Dan,

I don’t see a return to television in my future but I have learned never to say never. I can say that I love what I have been doing for the last ten years with AM640 and teaching for the last six years at Sheridan Institute of Technology and Higher Learning. My work for globeinvestor.com over the last number of years and public speaking have also been great and have kept me very happy and busy!

The last time I ran the charts on Lake Shore Gold Corp.(LSG TSX) was on March 17, 2010 for Fred. On that day the stock closed at $2.88 and it was observed that the stock had been under some selling pressure and that it would continue to struggle. The stock gave back another 13.19%  before catching a bounce that reversed the downtrend. The advance lasted until March 03, 2011 when it hit a high of $4.42. Unfortunately its been all downhill from there.

The charts will provide further evidence to help answer your question.

 

 

 

The three year chart illustrates the vast destruction of value over the last eight months. There is an established downtrend and a death cross that surfaced in June of 2011. These are not generally good signs on which to start buying. In addition the MACD and RSI are not suggesting a reversal of the selling momentum that has crushed the share price.

 

 

The six month chart depicts the resistance along the 50 day moving average on every attempt to advance. Support has formed at $1.25 since October which could provide the basis for an advance but at this point there is not enough evidence of a reversal to justify the risk.

If you were to be a buyer at these levels you would be swimming against a strong tide. I would say that patience would be the better part of valor. The best case scenario would be for a new uptrend to develop and then you could catch a ride.

Warren Buffett has made a fortune getting in late when a good part of the risk has been removed and getting out early. Calling an absolute bottom or a top is not an easy task. Letting a rising tide lift your boat  is a better bet.

Make it a profitable day and happy capitalism!

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