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originally published November 4th, 2009
Yesterday afternoon, with the price at C$0.73 an Email buy alert was sent out for ECU Silver with the promise to post a report later. After the alert the price continued to rise and closed at C$0.78. ECU Silver is a stock that we have successfully traded all year, with the latest buy rec being near the low early last month at about C$0.53 and we sold for a profit on the 22nd October as part of a general clearout of stocks, in order to sidestep a reaction. We did see a sharp reaction, but given that we were late buying back yesterday, the price at which we bought back in was only a little below the point at which we sold it.
On its 5 year chart we can see that ECU certainly looks like a solid, undervalued stock at this juncture, and more importantly it appears to be ready to embark on a substantial uptrend. It is in position to break out from a nearly completed Double Bottom base pattern, and its volume pattern and volume indicators are exceptionally bullish, suggesting that a sustained and substantial uptrend is incubating. It is true that it will have to work its way through considerable overhead resistance, but this could prove to be a lot easier than we would otherwise expect, as an abrupt change in psychology towards this stock is suggested both by volume and volume indicators, and the rapidly improving outlook for the sector. Before leaving this chart observe how the 50-day moving average is rising up through the 200-day for the 1st time in well over 2 years, indicating that an important reversal is occurring.
On the 1-year chart we can examine the fine large Double Bottom in detail, and see more clearly the moving average cross, which will soon result in the 200-day moving average turning up for the 1st time in years. Breakout from the base pattern will involve the price busting through the resistance level shown towards and at C$0.90, an event which should lead to the rate of advance accelerating significantly. Short-term oscillators such as the RSI and MACD shown on this chart are not very overbought, meaning that there is plenty of immediate upside potential.
Finally, it should be pointed out that ECU Silver is not some "moose pasture" junior, surviving "on a wing and a prayer", it is an established company that has been through a painful transition from major discovery to arriving at the point of going into production, and it has very significant established reserves. With the prices for its product set to rise significantly, the outlook for this stock is considered to be very favorable indeed.
The stock is rated a strong buy whilst it remains below the resistance at and approaching C$0.90, which probably won't be for long.
ECU Silver website
ECU Silver Mining Inc, ECU.TO, ECUXF on Other OTC, closed at C$0.78 and $0.735 on 3rd November 09.
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