Levon Resources (LVN, TSX-V), which recently completed a $40 million financing, is developing the Cordero Project in Mexico, a very promising porphyry Silver, Gold, zinc and lead system with multiple deposits potentially amenable to large-scale bulk mining. Levon should be watched closely and the stock had a very interesting trading day Friday as John describes below.
John: On Friday, Levon Resources gapped down and opened at a low of $1.40. It then reversed sharply and climbed to a high of $1.74 before closing at $1.70 for a daily gain of 20 cents (13.33%) on CDNX volume of 525,000 shares. It was down 2 pennies for the week on CDNX volume of 2.2 million shares.
Looking at the 1-year weekly chart we see that in July, 2010, 3 weekly “hammers” occurred which proved to be the basis for a 5-Wave Motive Phase. This phase started at the 50-cent level and peaked in April, 2011, at $2.38. From that point the stock retraced in a textbook ABC Corrective Phase to the Fibonacci 50% level at $1.40 which occurred Friday. The candle for last week was a hammer which, as we saw in July of last year, can be the basis for a reversal to the upside.
During the Corrective Phase the volume declined as expected during a primary uptrend. The supporting moving average is the weekly SMA(50).
Looking at the Indicators:
The RSI is at 48% and flat, just below the previous support level of 50% – bullish.
The Slow Stochastics (SS) is still pointing down, but this is after 4 straight down days. With an expected bullish move to the upside in the near future, after a possible short consolidation, it should reverse quickly.
The Chaikin Money Flow (CMF) shows the buying pressure started to increase during the past week – bullish.
Outlook: The chart pattern and the indicators all agree that LVN appears poised to make a bullish move to the upside in the near future.
Note: John holds a position in Levon Resources.
