S , Sherritt

S july 2011 l S jul 2011 s

Sherritt has worked out well a few times.(see also Feb. 23 blog) There is a distinct possibility that the stock is tracing out a “megaphone” (an expanding horizontal triangle). There are a few question-marks attached to this count but from a risk/reward perspective it is a rather compelling possibility worth pursuing . First, the stock yields about 2.5% and trades at a P/E of about 8. It has mining operations in Cuba which from an American perspective makes you persona non grata as you are trading with the enemy, but Cuba may soon have a management change and all of this will be forgotten. Secondly these megaphones can only occur in waves 4 or B. In both cases the next big move is up and up fast, most often close to where the upper trend-line runs ($11) The game here is to buy as close to $5.60 as possible (bottom trend-line and about 62% retracement). In the worst case the stock could continue to drop but then it would probable not go further than $4.5 (previous 4th wave) after which it would return to $7 anyway.

I have tried to contact some of you by e-mail. Your mail box is full!