Noront Resources Ltd. stuck in the Ring of Fire

Dec 1st, 2014 – 1 Comment

At the time of this posting there are no signals that the downtrend is about to reverse itself.


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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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NOT LOGO

How are you, Lou?

You mentioned several times on the Oakley show that you will look into some stocks if people are interested.
So I  ask you: what do you think about Noront Resources Ltd?
It seems that due to all the negative news it went so low, that perhaps it can go only up from here…

Thank you so much in advance.
Best wishes,
Alex

 

 

 

Hey Alex,

 

Thanks for the assignment and yes you heard me correctly there is an open invitation to listeners of AM640, readers of globeinvestor.com, and visitors to this site to send in their questions about the stocks they own or are thinking of owning. Each year I examine over 140 individual stocks on behalf of investors. You might ask what’s in it for me? The bottom line is that it is a good intellectual exercise and provides an opportunity to scout stocks and opportunities that have not been showing up on my radar.

This will be the third time that I inspect the charts for Noront Resources Ltd. (NOT TSXV). The last time was on March 2, 2011 on a request from Sheldon. The shares were trading for $0.78 and had been in a long term retreat that started in August of 2009. The conclusion of the analysis  was not to be too anxious to jump on the band wagon. Retrospectively that was the correct conclusion as the shares fell to $0.43 by September of 2011.

The biggest road block for the development of the company’s land position in the Ring of Fire is the paucity of infrastructure. Cliffs Natural Resources Inc. (CLF NYSE) shelved its project in the Ring of Fire on the lack of progress in getting a road built to the area. It also hasn’t helped that the mining sector has been knocked back on its heels as commodity prices have softened on slowing growth in China.

Scrutinizing the charts will better inform my thoughts on NOT.

 

 

 

 

 

 

NOT

 

The three-year chart indicates that NOT had a great run from a 52-week low of $0.15 in early December of 2013 which topped out at the 52-week high of $0.70 in May of 2014. Since the May high the stock has been in a steady decline and is meeting resistance all along the 50-day moving average. Also worth mentioning is the death cross that formed in October of 2014 which alerted investors to expect continued selling pressure.

 

 

 

 

 

 

NOT2

The six-month chart provides a close-up of the resistance along the downtrend line and the 50-day moving average. At the time of this posting there are no signals that the downtrend is about to reverse itself.

The Ring of Fire is a proven mining district which will remain stranded until road access to the site is financed and first nations concerns are satisfied. All things considered I might suggest that the best strategy at this juncture would be a tax loss sale and a review early in the new year.

Make it a profitable day and happy capitalism!

 

 

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