The pattern that has evolved in Yale is clear on its 3-year chart. It is a Pan & Handle base, or Cup & Handle, as the early part of the base is rather similar to a Cup also, that has dragged on for considerably longer before completing than we had expected as the Triangle has pushed right into its apex without breaking out. This base pattern has the characteristic strong rise to complete the right side of the Pan, when the price of the stock more than trebled, followed by a long dull period as the Handle reaction ensued. This Handle reaction has in this case taken the form of a large Symmetrical Triangle, which to anyone holding the stock must seem to have taken an eternity to complete, but as we can see, with the boundary lines of the Triangle now rapidly closing up, breakout MUST occur soon, and for the reasons which we will now relate, this breakout has a far greater chance of being to the upside rather than the downside.
What are the indications that Yale is about to break out to the upside. The first is that it is a silver stock, and silver is believed to have started a breakout drive that will soon lead to its breaking out to new highs to enter a vigorous uptrend, which should of course have a beneficial effect on most silver stocks. The second reason is that the volume pattern in Yale has been consistently positive for a long time, which is made more clear by the strongly rising On-balance Volume line shown at the bottom of the chart. Rather oddly, the Accum-Distrib line (not shown) is nowhere near as positive, but this is frequently unreliable and needs to be confirmed by OBV. For all these reasons, an upside breakout is believed to be imminent.
The 15-month shows the triangular Handle reaction in its entirety in much more detail. On this chart we can see how volume has died back over the past several months as the price has drifted sideways in a narrow range. This is another indication that an upside breakout is likely soon. Yale has a reasonable 70 million shares in issue.
Yale Resources website
Yale Resources Ltd, YLL.V, YRLLF on Other OTC, closed at C$0.07 and $0.069 on 30th August 10.
Posted at 9.30 am on 31st August 10.
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The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities.
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