On Aug. 13, 2014, Jeff asked for an analysis of several stocks, one of which was Rubicon Minerals Corp. (RMX), which he had purchased for $2.12 a share. This will be the second time that I examine the company.
The last time was on July 12, 2013, on a request from Jim. The stock was trading for $1.30 and he wanted to know if I thought it would be prudent to buy more to average down on his original purchase price of $5.00. Averaging down is not something I usually recommend.
The analysis indicated that there were plenty of trading opportunities even with a stock that was in the grips of a downtrend. At the time the RSI and the MACD were generating signals that a trade was setting up. Retrospectively, that is what transpired.
Another inspection of the charts will provide the basis for my opinion.
The three-year chart illustrates the trade that formed in July of 2013. The stock caught a lift from $1.20 to nearly $2.00 by August but that was all it had to give. What is also noticeable is the resistance that came in along the 200-day moving average and the downtrend line. RMX retreated to a 52-week low of $0.69 by December of last year where buying started to come in.
The MACD and the RSI both generated buy signals at the lows and RMX ran back towards $2.00 by mid-February 2014. Once again the shares pulled back, retreating to $1.00 by late May. The momentum indicators then signalled a buy, sending the shares to just over $1.75 by mid-July. In the July 12, 2013, analysis it was advised that RMX offered a number of trading opportunities but was perhaps not the best stock for a buy and hold investor. It would be safe to say that we continue to see the same scenario playing out in 2014.
The six-month chart provides a close-up of the buy signal generated by the MACD and the RSI in June leading to a sweet gain in less than sixty days. The momentum indicators signalled a sell by the later part of July when the shares began a retreat from $1.80. At the moment there is nothing on the charts to suggest that the selling has abated. The best way to approach this investment is to consider a trading strategy.
Make it a profitable day and happy capitalism!
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- Rubicon Minerals Corp$1.56-0.01(-0.64%)
- Updated August 23 11:26 AM EDT. Delayed by at least 15 minutes.