We have racked up a 75% gain in Scientific Metals since
we bought back into it at an optimum point on 6th March, and it is now considered to be worth
TAKING PROFITS AT ONCE, and standing back for a while to see what happens.
While to some extent this is a case of taking a profit because we have one, there are some sound technical reasons for stepping aside at this juncture, as we can see on its 3-month chart below. A big one is that it has been in a steady, plodding uptrend for about 5 weeks now, that has resulted in its becoming critically overbought on its RSI indicator since the start of the month, which is a condition that cannot be expect to persist indefinitely, and we have not seen a black candle on the chart for 12 days now. This uptrend has lacked the vigor of the preceding one so that the new high is not confirmed by the MACD indicator which is at a lower level than it reached at the February high. An additional reason for caution is that a large gap has now opened up with the 200-day moving average, which is another measure of how overbought it is. What all this means is that should it suddenly break sharply lower, a lot of investors like us are likely to rush to take profits, and it could correct back quite hard, and it will of course be perfectly acceptable for this to happen right after we take profits, so that we can buy it back cheaper later, as we did after the February peak.
Sure it may continue higher, but discretion is thought to be the better part of valor here, especially as we have a 75% appreciation in just 5 weeks. TAKE PROFITS IMMEDIATELY. If a reaction or period of consolidation ensues, we can always back it back later.
Scientific Metals
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Scientific Metals Corp, STM.V, SCTFF on OTC, trading at C$0.79, $0.58 at 12.15 pm on 12th April 17.
Posted at 12.20 pm EDT on 12th March 17.