Imperial Metals Corp. is not a buy and hold stock

Jul 19th, 2013 – Comment

What III needs is a sustained increase in the price of the base and precious metals it produces in order to provide investors with a sustainable uptrend.


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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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Hi lou.
What do you think of Imperial Metals over the next 2 years.

Thanks,

Al

 

Hey Al,

Thanks for the assignment. Right off the bat I won’t be able to provide visibility  on what might happen to Imperial Metals Corp. (III TSX) or any other stock over a two year period. I base my evaluation on trend, support,resistance, while advocating constant surveillance. Investors cannot afford to buy a stock and never look at their statements. A daily review of the charts to ensure that the reasons you bought the shares are still valid is not an option it is a requirement.

An investigation of the charts will help put the current situation in focus and from there you can decide on how best to proceed.

The three-year chart depicts the volatility that has been the major theme for III. There have been fast and sharp advances followed by steep retreats. What is clear from this chart is that buy and hold has been a wash while trading for profit has demanded a high level of disciple and execution. When the shares failed to hold support at $16.00 in April of 2012 it set up a rapid decline to just over $8.00 by August 2012. The MACD and the RSI both signalled a buy from the August lows setting up an advance to $15.00 by January of 2013.  The breach of support at $14.00 in April of 2013 ignited another decline to current levels.

 

 

 

 

 

The six-month chart provides a close-up of the sell signal generated by the MACD and the RSI in April and the subsequent break below support at $14.00. Also worth mentioning is the resistance along the 200-day moving average in late April and is the death cross that surfaced in May. Currently the stock has met resistance at $11.50 and has a ledge of support at $10.50. Finally the MACD and RSI are indicating a retest of support at $10.50.

The research conducted on your behalf suggests that III is not a great stock for a buy and hold investor and demands discipline and skill from traders. What  III needs is a sustained increase in the price of the base and precious metals it produces in order to provide investors with a sustainable uptrend.

Make it a profitable day and happy capitalism!

 

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