It tickles me when investors go on incessantly about news flow being something that keeps the price of a company afloat..
I don’t invest according to news flow. I will invest according to the trend and if news presents within the trend then it’s a bonus.
Galantas Gold Corporation (TIDM: GAL) saw its price drop from the end of August 2011 to the end of November 2011, despite a series of positive RNSs relating to drilling. The price remained flat at 3.625p for much of December 2011 before slowly making its way to a peak of 6.375p in early April 2012. I made the following observations:
1. Bullish divergence signals for daily ultimate oscillator and volume between the lows of 3.625p (end of November 2011) and 3.375p (12 January 2012)
2. Between January and March 2012 various RNSs produced price spikes which resulted in investors ‘selling on news’ and the price ranged in the 3.625p-4.75p region.
3. Two hourly Coppock curve cycles appeared – the first cycle in January-February 2012, which didn’t lead to a proper trend (by an hourly Elliott wave); the second cycle began mid-March 2012 and this did produce an hourly Elliott wave (9/100/200 exponential moving average combination) which resulted in the price breaking through the daily ichimoku cloud before making its way to the RNS-induced peak of 6.375p on 5 April 2012 when the daily slow stochastic oscillator was extremely overbought.
4. The intraday hourly chart produced an ascending triangle between 26-30 March 2012 prior to the breakout above the triangle top at 4.875p.
5. A hidden bearish divergence signal (lower price high versus higher indicator high) presented between the peaks of 5 April 2012 (at 6.375p) and 31 August 2011 (at 6.5p) with respect to daily volume, money flow, and ultimate oscillator, and weekly money flow and ultimate oscillator. Weekly slow stochastic oscillator had also become overbought too in April 2012. These all pointed to a potential imminent downturn in price.
Note the biggest volume day came on 5 April 2012 – the peak of the short term trend. It certainly begs the question of why did investors wait until the price got to 5.5p+ on the ask before buying in their droves when the price had been wallowing under 5p for a good few months? Do you think that’s a fair question?
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