What can you tell me about Lake Shore Gold.
This will be the third time that I have conducted a review of the shares of Lake Shore Gold Corp. (LSG TSX). The first time was on March 17, 2010 when Fred asked for an analysis and my opinion at a time when the shares were trading for $2.88. It was observed that the stock had breached its uptrend line and was pulling back. It was advised that investors should expect a stream of press releases to flow as the results of the $31 million exploration budget that would provide a lot of new information about the company’s prospects. In addition it was suggested that it would be profitable to be patient given the period of seasonal strength for precious metals which runs from July to October. Retrospectively that is exactly what happened. The stock caught a lift in July of 201o and ran to the high of $4.50.
The second study was conducted on November 28, 2011 on a request from Dan who wanted to know if he should be buying at a price of $1.31. The analysis revealed that the shares were meeting a lot of resistance and that buyers would be swimming against a strong tide. Subsequently the shares have found new lows.
Another run of the charts will provide some of the information you will need to decide how best to proceed with this company.
The three-year chart illustrates the relentless selling pressure that has crushed shareholder value since the breach of the uptrend line in May of 2011. There have been opportunities to trade the shares for profit over the course of the retreat but clearly you had to be on your game to capture the opportunities and not get sideswiped in a selling frenzy. Note the death cross that surfaced in June of 2011 when the shares were trading at $3.75. A death cross is a call to action that demands attention and a review of why you own a stock.
The six-month chart tells the tale of a stock that has failed to reward investors. Neither the MACD or the RSI are indicating that the shares are about to reverse the downtrend or even to make a short run to the upside. I would not be chasing this stock.
Make it a profitable day and happy capitalism!