We took a good profit in STM over a week ago, to sidestep the risk of a reaction and wait on the sidelines to see how things played out. Since then the stock has tracked sideways in a very narrow range which has allowed its overbought condition to ease somewhat. However, it is now looking like our caution was a little misplaced, for the indications are that it will soon take off higher again.
On its latest 3-month chart we can see that the volume pattern remains positive, with little volume on down days, and volume indicators are making new highs, and this and the volume pickup to a two week plus high on Friday’s up day are signs that it is ready to break higher again, and given that the market is set to open strong after the French election result, today is as good a day as any for it to do so.
Conclusion: time to buy back, and because the stock has been trading in a tight range over the past week or so, a stop may be set beneath its lower boundary, say at C$0.74 or C$0.72, in case the trade backfires.
Scientific Metals
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Scientific Metals Corp, STM.V, SCTFF on OTC, closed at C$0.79, $0.58 on 21st April 17.
Posted at 7.50 am EDT on 24th April 17.