Yaounde, Cameroon Africa. February 2011. (Cameroon News) – Sundance teaches an important lesson as to how to key in on winners before they move out elsewhere.
Cameroon Mining
This week Robert Brain, national director of the Australian Technical Analysts Association, takes a closer look at a similar situation in his analysis of mining major Sundance Resources.
Sundance, with a market capitalisation of $1.3 billion, is a prominent mining and exploration company based out of Australia developing iron ore deposits in Cameroon and the Republic of Congo in central West Africa.
The production plans for both the mines are slated to kick off in 2014.
In order to progress further in its proposed plans the company has been on the vigil for strategic partners who are capable of offering strategic support with its capital requirements.
It announced at the end of last month that it had been having discussions with South Korean steel maker Posco, news that immediately saw the stocks surge up to 50¢ after a decline from 60¢ since the beginning of this year.
However, there has been no further news of progress.
The chart keeps track of Sundance against the S&P/ASX 200 Index since June.
The index bottomed on July 5 and has since then gone up by 15.6 per cent over a time frame of 33 weeks. Over the same period Sundance, for those who have been lucky enough to have taken the pillion in their ride up, has gone up by a handy 272 per cent to 51¢.
This is how a prudent investor could have made the best use of Sundance’s uptrend. The first thing to check out was the stock breaking through its then ceiling of 15¢ to 16¢ late in August.
”Another good clue was the increase in weekly volumes that became apparent in September 2010 in the lower portion of this week’s price chart,” Brain said.
”The weekly volume bars were between about 50 and 100 million a week in the first six months of 2010, then rose to about 200 million a week.
”This is easier to see by placing a moving average [the blue line] on to the volume bars as shown in the diagram.”
For the very sharp investor eyes, ”the double observation of the price breaking above the August resistance of 15¢-16¢ and the weekly volumes stepping higher confirmed what we call a ‘price breakout’, which happened in the week of September 6”, Brain said.
That, as the chart indicates, would have been the best time to place the bets on Sundance.
