Just about the only thing left in the Financial Times – one of the worst examples of mainstream, woke, media smugness around (to be fair I would be if I wrote for it), is actually “The Life of a Song”. Everything else, on politics, economics and of course, all the wrong market calls – is a disaster.
Therefore, as much as anything else, rather than Chart of the Week, which this article was going to be, today we have the story of the rise and rise of Eurasia Mining shares. There may be more stocks in the series!
Dividing The Market
Amazingly, this company has totally divided the market, with a bid / ask between a £0 valuation, and up to £4bn. Yes, and these opinions are still live.
Clearly, at the moment, the uber bears are about £600m out. But it would seem, once a bear, always a bear. Unfortunately, for the short sellers, we are actually in one of the biggest bull markets ever in UK small caps and are likely to be so at least until President Trump gets re-elected, or perhaps even re-elects himself, in the autumn. Recent rises in stocks such as one of the calls I am more proud of than most, Supply@Me (SYME), remind us that in a bear market you should buy value, in a bull market a monkey throwing a dart at the aforementioned Financial Times can deliver the goods.
The recent charting story of Eurasia started on October 21, with a spike in the shares to a 0.95p close, easily breaking the September intraday peak at 0.6p. That afternoon I called the stock higher – while above 0.6p, but it was difficult to come up with a target higher than an August resistance line projection at 1.4p. Indeed, that was the peak zone the following day. But in fact, the problem in these take off situations is not so much the target, it is the stop loss. The best is either the previous day’s low, or on a wide range day, half the range.
The next phase of Eurasia’s progress took place within a rising trend channel that could be drawn from October. This included almost all the price action until the stock’s suspension in February. The fact that it did shows it was drawn correctly, as did the way that the floor of the channel was backed by the blue 50 day moving average. This meant that between October and February one always had 7p as a viable technical target, especially after the unfilled gap to the upside through former November resistance near 5p.
Of course, the $64,000 question, or is it the $4bn question, was what the stock would do once it came back from suspension, or if you are a bear if it ever did? Interestingly enough, I heard that shorts would be automatically closed out at above 12p if it came back – by the brokers they had their positions with. Suprise, suprise, the stock opened at 10p-15p, all rather painful. It was almost as if the market knew how to part as many people as possible from their cash.
In the immediate aftermath of the return from suspension, the assumption was that initial 10p support would hold and that a break of 15p could lead towards the top of a December trend channel. Initially 25p, and currently, the line is heading as high as 30p. 30p is valid while the stock holds above the floor of the channel at 18p. It should be remembered that if a trend channel floor breaks the upside call is invalidated. We shall see.
Nevertheless, as a bit of fun, especially if you are a Eurasia Mining fanatic – they are presumably in the ascendancy at the moment, it may be worth looking at the “best case scenario” in the final chart.
Clearly, 70p as a 2-3 months target derived from the top of the January trend channel drawn, will cheer Eurasia Mining groupies. But how likely is it?
Even as things stand in the low 20p’s, Eurasia is in the Tesla (TSLA) zone as far a stratospheric rallies are concerned. We are looking at a stock which is say in the top 2% of the whole stock market in terms of bullishness.
The key here will be if there is further need to test the floor of the January channel at 20p, and whether fundamentals will kick in to cool the situation down? Only time will tell.
Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.