Nov 25, 2010 Ram Resources (RMR) ? Insider Buying Or Bubble Fear Overcome?Categories: ASX Speculative Stocks
Ram Resources (RMR) is a stock that I posted about back in late October when the share price jumped sharply on what appeared to be insider buying. The next day there was a strong open and a high of 4.1c was made but then there was a drastic sell off. I warned about the volatile nature of the stock and my warning was proven correct unfortunately.
Since then the share price has fallen to lows of 2.5c and has pretty much been range bound. An upper resistance level at 2.9c was formed and a floor was made at 2.5c. Today the share price broke through that upper resistance level and closed at the day?s high of 3.2c for a 23% gain. There was also a sizeable jump in trading volume.
The chart now suggests that there is more upside in the near future. The break past the resistance line at 2.9c is a buy signal.
What prompted the break today has me guessing, as it could just be the market realising that there is no bubble in rare earth stocks. Somebody picked up the idea that the price rises were false, and unfortunately the media swallowed it hook line and sinker. Countless news articles and opinion pieces warning of the price bubble resulted in a sell off in all listed rare earth stocks. Some dropped significantly.
Today there were a large number of listed rare earth explorers that performed reasonably well in what was a very quiet market. Perhaps it was the news of Lynas Corp securing a major deal with a Japanese trading company that made people snap out of it. Ram Resources was one of those stocks that benefited from the renewed interest.
There are other possible explanations for today?s breakout in Ram Resources share price. This recently released investor presentation mentions that drilling results are due by the end of November. Also as my previous post mentioned, a speeding ticket referred to the possibility of the company making further acquisitions in the near future.
So today?s jump could be the result a number of possibilities. It could be that insiders are buying up ahead of drilling results or other news that the company is about to announce. Or it could just be a re-appraisal from the market as people start to realise that there is no bubble in rare earth prices.
RMR Price at posting:
2.9¢ Sentiment: Buy Disclosure: Held
