SILVERADO update... 03/01/06
We now have the expected healthy reaction in Silverado following the huge speculative ramp a few weeks back. We sold half right at the peak, and have since lain in wait and observed the battleground as hopeful new buyers have balanced profit takers as a Symmetrical Triangle formed. Doubtless to the horror of the recent buyers, the triangle has broken to the downside, leading to a rather steep drop over the past couple of days, and the huge volume today signals that they are throwing in the towel. We took the view that the triangle would break to the downside, because it formed at such a high level, amid intense speculative interest, and were thus not deceived by the seemingly bullish volume dieback during its formation.
The stock has now reacted right back to the 50-day moving average, and with volume very heavy today, it looks like we may have a Reversal Day in the making here. It is therefore considered to be a good entry point, especially for those who sold half at the top, although we should remain aware that it could drift a little lower before the reaction phase is complete. It might therefore make sense to buy some here and more on any further reaction.
Due to the fact that the recent spike was preceded by a buildup lasting many months, it is not thought to be an isolated ?pop? or ?flash in the pan?, but rather the start of a sustained uptrend in this stock, hence its attractiveness on the current reaction.
Silverado website
Silverado Gold Mines Ltd, SLGLF on OTC BB , trading at $0.122 at 1.40 pm on 1st March 06
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