Jul 23, 2010 10:31 AM PDT
I actually went bearish on American Lithium Minerals Inc. (OTC:AMLM) on October 22nd after witnessing what appeared to be a blowoff top and a strong reversal (a mirror image of the blowoff top bar). All told, the two-bar pattern started at $2.14, peaked at $2.99, and ended at $2.36... and extreme reversal by anybody's standards.
Though the stock drifted higher the next couple of days, today's close of $2.12 for American Lithium Minerals is the lowest close yet since the peak from the 22nd. Moreover, the selling volume behind today's dip from AMLM was stronger than either of the two bullish days prior to it.
I (still) really thing the bears are taking over American Lithium Minerals; I don't know how ugly it could get though.
Wow.... what a change of fortune for Avro Energy Inc. (OTC:AVOE). When I went bullish on the stock back on the 22nd, it was at $0.70. I checked back later the same day, and it was at $1.17; I figured I got in just in time. Since then, it's done nothing but slide lower... under $0.70, all the way to $0.60.Yet, I'm still strangely compelled by Avro Energy. Don't here me wrong - I'm no fan of jumping on a hand grenade or trying to catch a falling knife. I just can't ignore the fact that the surge was made on huge volume, while the pullback from AVOE has been made on light (and getting lighter) volume.
I'm keeping this one handy.
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Remember my bearish call on OceanFreight Inc. (NASDAQ:OCNF) from October 20th? Yeah, well, I caught a little flack for it, but I'm glad I stuck to my guns. It was priced at $1.16 then, versus the current price of $0.98... about a 17% move.
I only bring it up now to point out how the breakdown played out. Once OceanFreight shares cracked that support level, they never looked back. In fact, OCNF appears to be accelerating lower; volume hasn't let up either.
If your broker lets you short these things and you could actually find some shares to borrow, I'd suggest keeping a real short leash on OceanFreight. I still feel we'll ultimately revisit March's low around $0.80, though there's no reason not to protect our profit on OCNF if you've got one.
And finally, I wanted to ass a detail to the Discovery Laboratories, Inc. (NASDAQ:DSCO) saga.
I renewed my bearish view on the Discovery Laboratories on October 7th, though the actual outlook was first issued back on September 30th. I'm revisiting it again today for two reasons..... (1) to show you how the next potential floor broke down, and (2) to show you where DSCO could slide to within the framework of its falling channel lines.
Though you can't make it out all that clearly on our weekly chart, there was a bastion of horizontal support left at $0.90. DSCO tumbled through that mark last week though.
The reason we wanted to zoom out to a weekly chart for Discovery Laboratories was to fully illustrate the reliable - and bearish - trading range we've observed since 2007. If this pattern continues to repeat, DSCO may not find support again until $0.04 (seriously). There's potential support around Q3's lows of $0.50, so we'll be watching that are too if/when it becomes a factor. Until then though, the deck seems stacked against this stock.
If you'd like to know of any changes in our opinion of DSCO, OCNF, AMLM, or AVOE (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered weekly.
