As anticipated the incentive for management by way of options has all but been eliminated with the stock at these depressed levels. From $2.60 to $0.65 is around a nice Fibo 76% so it is possible that the stock will recoup some of its losses, but odds are overwhelmingly against a major rebound given their burn rate, the weakness of one of their backers and our low expectations with regard to the metal itself. Stand aside.
Disney made new highs the other day, just above $50. In our view this completes the wedge and reaches the upper parallel boundary. Time to sell. See previous blog as well.
Back on the 21 of Dec 2011 we expressed the opinion that one should stand aside. or perhaps even get short this stock at roughly $45, see the red arrow;
We were wrong. Now 8 months later the stock is higher by a single dollar having been below that $45 level for most or even all of that time. It is not at all clear what the pattern is but I suspect that somehow a triangle is hidden in this chart. In any event the upside is very limited as becomes clear looking at the following charts;
As can be seen from the Bigchart the stock is right on the upper boundary. Looking at it from the 1980-ties, the stock is now trading above a channel that has defined it for most of that time. In 1980 20 year bonds were close to 20% in Canada at which rate your money more than doubles every 4 years (rule of 72). There are 6 such periods into 2000 so by that time you should have had 64X your money (abstracting from taxes , dividends and other minor considerations),and there are still 4 such periods left. Calculating value differently, by simple comparing prevailing rates, then 20% , now 4% the stock should be roughly 5x more valuable all other things being equal. It is not,just 4.5x. Still a sell in our opinion.
We are , temporarily, inclined to step aside. Wait for one more high to the upper trend line and put is a stop at the lower one ($18). That guarantees a $4 profit no matter what and perhaps a little more.