If possible, could you please take a look at DML; it seems to be slowly entering a Lehman DEATH spiral!
Thanks for the assignment. When you say Lehman – it makes my skin crawl! Thankfully the situation at Denison Mines Corp. ( DML TSX) may have consequences for those invested in the stock but it won’t shake the markets like Lehman’s collapse did!
This will be the third time since 2010 that I examine the charts for DML. The last was on November 19, 2014 when the stock was trading for $1.36. George wanted an evaluation of the stock based on an analyst forecast that uranium would fetch $50.00/ pound within a year. Unfortunately the price of yellow cake never reached $50.00/pound negating the investment thesis.
The research indicated that the stock had caught a lift off a 52-week low to resistance along the 200-day moving average. The analysis identified a pennant formation that suggested a continuation of the advance but the stock was not able to break above resistance.
Another inspection of the charts will help identify how best to manage this asset.
The three-year chart highlights the decline that started in late November of 2014 as DML started a new leg down. Resistance along the 200-day moving average persisted until June of 2015 when the stock broke below support at $1.00. After that it was all over except for the crying! Not even the announcement of the acquisition of Fission Uranium Corp. (FCU TSXV) on July 6, 2015 could quell the selling. DML hit a 52-week low of $0.55 where it caught a bounce to its current level.
The six-month chart reveals the steep decline that pushed the stock into a deeply oversold situation as it hit the 52-week low. Of note were the sell signals generated by the RSI and the MACD in late April as the shares hit resistance along the 200-day moving average. In late July the momentum indicators signalled that a speculative trade was setting up as the stock hit the 52-week low.
DML has to be viewed in the context of the global energy complex which is suffering from a bad case of excess supply of crude oil and weak demand on slowing economic growth. July 30, 2015 the company announced the sale of its interest in a Mongolian joint venture. The sale is in line with management’s intent to create a pure uranium play centred in Canada. However the deal wasn’t sufficient to reverse the downtrend.
Next time I will probe the charts for Spectra7 Microsystems Inc. (SEV TSXV) for Luciano.
Make it a profitable day and happy capitalism!