Tuesday, April 5, 2016

A Huge Base Breakout In The Hottest Sector

Tahoe Resources explores, develops, and operates mines in the Americas.  The Company primarily produces copper, gold, silver, lead/zinc, and natural gas and petroleum.  Very simply, Tahoe is part of the hottest sector so far this year which is the Juniors Gold Mining Sector (GDXJ).

I'm always intrigued by huge bases from stocks that are trading near their 52-week low.  Normally a prolonged period of contraction leads to a prolonged period of expansion.  Tahoe Resources traded between $7.45 to $9.85 for about 9 months, it broke $9.85 to the upside and immediately tacked on a 16% gain in 2 days.  Since then pulled back, retested the 9-month breakout and so far it is bouncing off it.  This type action is very constructive and it gives you an opportunity to get in with a very good risk reward ratio.

Prior to Tahoe's 9-months of sideways action, the stock was in serious downtrend along with the entire gold mining sector, the sellers were in a control.  As it started to base, the buyers and the sellers started to find equilibrium, by the beginning of the year the buyers started to take control, every pullback was being bought aggressively.  A pattern of higher lows ensued, which is exactly what you see right before a stock with this type of basing pattern does before it exits the base and makes a big move.

My opinion and outlook are subject to change as new information comes in. 

Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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1 comment:

  1. Hi!

    Loved your post. I like to learn about computers and people involved in Stocks and their journey of how they get involved, what they learned in starting months and so on.

    Would be a regular visitor of your blog now onwards.