San Gold Corporation still trading under a caution flag

Dec 12th, 2012 – Comment

Over the last 27 days there hasn’t been one day where volume has met or exceeded the average.


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I just read some comments you made on San Gold in 2010 just after it was listed on TSX.

You didn’t much like it at $3.60 back then (couldn’t blame you).

How do you see it today at under $0.80.

Thanks

HP

 

Hey HP,

Thanks for the assignment. I appreciate your use of the archive for happycapitalism.com in doing your research. I look at it as a Wayback Machine for readers that can help all of us us learn from the past so we can accentuate what works and correct what doesn’t. It also helps to keep me humble when I realize that I don’t get them all right. This will be the second time that I examine the case for San Gold Corporation (SGR TSX). The last time was on October 8, 2010 when the shares were trading for $3.36. John wanted some guidance and it was advised that there were a number of patterns on the charts which signalled that caution would be the best path to follow.

It was observed that the stock was trading in a down channel and that it had broken support at $3.80 and along the 50 and 200-day moving averages. What I failed to mention in the original analysis was that a death cross had just surfaced which would have added more weight to the case for a cautious approach.

A second run at the charts will provide additional information as to the opportunities and risks associated with SGR at this time.

 

 

The three-year chart offers all the lessons you might want to learn so you can avoid buying high and selling low. The first thing to realize is that there has been plenty of time to get off of this ride and preserve capital. SGR didn’t drop from $3.36 to $0.78 in a waterfall crash. It has been a long grinding series of lower highs and lower lows. Other features worth making note of include the death cross that formed in October of 201o and that has been in place ever since. In addition there is the downtrend line that dominates the chart as well as stubborn resistance along the 50 and 200-day moving averages. Now that we have mined the past let’s look at what might lie ahead for SGR.

 

 

 

 

 

The six-month chart is not providing much in terms of positive signals. The MACD and RSI are not indicating a reversal of the selling pressure. The downtrend still dominates the chart and the stock is trading below the 50 and 200-day moving averages. Volume is also not sufficient. The average daily volume over the last three months is 953, 844 shares. Over the last 27 days there hasn’t been one day where volume has met or exceeded the average. What that tells me is that investors do not want to own this stock. At this point it appears that the shares will have to retest support at $0.725. The caution flag is still on the track for SGR.

 

Make it a profitable day and happy capitalism!

 

 

 

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