4 weeks to Christmas..... Kalimantan Gold Corporation

Thursday, 29th November 2012 10:01 - by Moosh

Between October 2011 and Spring 2012, KLG provided two opportunities for short term trends which were weekly oversold-overbought price swings, with each relating to forestry permit news.

Spring 2012 saw the price go oversold again on a weekly view (with slow stochastic oscillator), hastened by negative Eurozone issues – this external factor of Eurozone also made me remember just how sensitive AIM-listed companies can be to global negative economics, especially if these events happen to be timed during a period in which an AIM share might already be trending down. It’s always worth remembering that such incidents can happen at any time and could have major impacts on any profits that you might be holding onto tightly. Since I had sold my short term hold in the previous KLG swing, I just used the Eurozone-driven price drop as an opportunity to buy as a start to  tracking the oversold-overbought swing for a third time within a year for KLG - the news ‘hook’ which reeled investors into buying KLG during this latest uptrend related to drill results from the Jelai Gold project. Seeing as I had successfully traded the previous price swings, I decided to have another go but used it to try out a different investing set-up – a ‘seeding’ method. This was where I bought a few small volumes of shares towards the start of any potential trend (the seeds). As the trend developed I was able to get a better understanding of the level of investor support in the early stages of the trend and once I was comfortable with the level of support, I then bought a larger volume of shares and took profits into the price rise (with or without news) as normal.

Total bought:                                     11666 shares                                      total = £635.73

Total sold:                                          11666 shares                                      total = £737.47

Total profit:        £737.47 - £635.73 = £101.74, a 16% return on investment

The KLG daily price rise took much longer than the previous two swings – in this case, around 2 months, and a daily bearish divergence was signalled between price and indicator peaks towards the end of the run, accompanied by a head and shoulders pattern with the right shoulder pre-empting a negative KLG news event – had anyone been trading the trend rather than the news then they would have had a good 2 months from start to end and been in and out of KLG with a reasonable profit and used the investors who hang on for news. Some may read that and smart a little, perhaps it’s too blunt, but as long as there are investors, there will be traders who use these technical signals to be in shares at the right time and out at the wrong time and use the ‘fundamental-only’ investors to make profit from. That’s how it works.