Bears on defensive, attack in final minute of trading
Bears played defense most of the day today by sitting heavily on the low ask. The primary culprit was once again VNDM along with their colleague CSTI. They wouldn’t let price move up yet at the same time they did not launch their usual lunch time bear raid. I speculated that this was an effort to save bullets for the final hour of trading, and it really came down to the final few minutes of trading where they dropped about 75,000 shares into bid to ensure that the price closed fractionally under a nickel.
This by no means puts them break even on their position which was I believe to be short from 4.5 cents, however when you are dealing with margin having the position only a half cent against you as opposed to a full cent or more makes all the difference in the world.
This morning’s press release, although good news as by my estimate gives the stock at this very moment an 11 cent valuation, did not have the necessary effect to get large volume buyers to clear out the ask. Most of the day saw 5,000-50,000 order size, with one 131,000 share buyer, but the total volume was light with the final tally at 1.4 million.
After yesterday’s heavy volume to the downside big buyers were likely a bit cautious about jumping in on a Friday afternoon when they have the weekend to talk with Mr. Mulshine and can watch for further confirmation next week. As I said yesterday we probably needed to clear the 6 cent area to flush the bears from their position, but given the direction of the company with 2 producers under their belt in the last week and more on their way, it is just a matter of time. Today was a light volume pause day where nothing really changed but I see only reasons to buy and not to sell either technically or fundamentally.
One thing I wanted to point out is that despite the drama unfolding here, the weekly stock price action is eerily reminiscent of last year’s price action.
In May of last year price traded into the 2 cent level intraday but moved back up and hit 7 cents in July. The week after it hit 7 cents it moved back down and closed at 4.8 cents.
In June of this year, Just a little over 12 months from last May, TECO hit 2 cents intraday and touched off a July rally into 7 cents. The following week, this week, it had a close at 4.95 cents, fractionally higher than last year’s pull back in this time period.
If you look at the chart you can see that in the following weeks in 2011 the price made a run for a higher pierce of 7 cents before coming in. I think that this year we are following the same pathway, but instead of pulling back to the 4 cent level, we break through the 7 cent level by the end of the month and the stock makes a run for the January highs in the weeks to come.
We have 2 new wells that have come online in the last 2 weeks, and who knows what Treaty has in store for us in the coming days and weeks for West Texas and Belize.
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