Hi Folks
Races finished early today as they were bought forward by the pending heat. So I thought I would look at the BRN weekly chart to fill in some time.
I have been charting for many decades and have learnt, from my scars, to become very wary of three strong green candles happening with the absence of back-up news. Especially if the 3 strong green candles are followed by a very strong retrace as has happen recently with 53.5 down to 31.5 (41% retrace).
A very smart robot issues a warning "danger Will Robinson, danger, be wary of the Dead Cat Bounce" 31.5 to 45 is indeed an impressive bounce.
Currently at 38.5 the status of whether the cats alive or not, is difficult to determine, the jury is still out. We shall see when it plays out.
Why am I here issuing warnings? I am an old holder since the 6c days. In the Mercedes boom I sold a small portion 15% into the first DCB 2 weeks after the peak. In hindsight, I should have sold more but was avoiding strenuously paying a fortune in CGT even after the 50% long holder discount.
In hindsight I should have backed Prince of Penzance at 100/1 in the Melbourne cup.
So even now with decline from 53.5 to 38.5 it hurts as I have on paper lost more than twice as much recently than I paid for the shares.
However I am in for the long hall as I more than free-carry my holding, it paid for itself and put serious money into my speculation account. I am looking for the day when BRN pays above a 6c franked dividend. I use to think that would happen within 5 years, Nowadays thinking within a decade, who knows?
On my chart below I have labelled the action that happened just recently in April. With the recent action it looks very small in hindsight. However at the time it was a genuine serious event.
3 strong green candles rising from a low of 35c to 52c in 3 weeks a 48% gain. Something must be going on? Then a fall back to 39.5c (what the ?) to be followed by a DCB to 49.5 ( impressive DCB). Then three red candles with more downside in the months ahead.
The current action just seems to be a bigger version of the same event, albeit still playing out. I am here to suggest that people be wary of the last surge.
Since the peak we have recorded 2 red candles on the weekly charts. which I read as bearish after the 3 strong weekly green candles.
So the score in my 2 week game between the BRN Apples and my Bananas comparison team, that started Monday last week, is at half time 12-12 and with the betting with this weeks red candle favouring the banana team. So expecting another red candle in the week ahead.
So contrary to opinion you can compare apples with bananas.
When the Poseidon boom happened it happen across many sectors and the charts across those sectors during the crash bare a strange resemblance.
It has rehappened across the many boom's and crashes since 1969. Apples, bananas, oranges, banks , retail, insurance , tech's , mining , communications, manufacturer all falling together with varying rates of decline.
I have examined these boom/crash scenarios and have found them replicated in individual stocks. Lithium stocks are currently in the down phase after an all mighty boom. it will find a bottom at some time. All the booms large and small have something in common they were heavily overbought.
Anyone want to pay 60 Guilders for a tulip plant back in the 1600's?
I have thought about the cause of the recent boom in BRN, at first I thought it was someone building a significant position in BRN. However if that were so then the pullback to 31,5c from 53,5 would not have happened as the buyer would have gobbled up the shares when they first reentered to high 30's.
The another cause occurred to me, It's just my speculation, so DYOR.
BRN has had serious shorting action in the past. I suspect much money was made when the SP fell into the 16-20c zone, where it stayed for months.
Hard to make serious money out of shorting an 18c stock as the volume of shares you would have to trade would have to be enormous
However a push back up to the 30's-50s would present all sorts of opportunities?
just my speculation, but food for thought.
If I am right then in the coming months the "Shortmans Charts" could be a source of confirmation to my idea.
Many here have rightfully pointed out that news of a IP deal would be a game changer, and I agree with that. I am hoping for it.
Not just income hitting the quarterly accounts from clients buying the new Akida 2.0 chip for further testing, but an IP deal.
However if I had an ongoing bet with someone for the last year that they buy me a cup of coffee every trading day without such an announcement and if the announcement comes I would take them out for a huge slap-up dinner. Well I would have paid for that dinner several times over with my savings in coffee.
So enough rambling.
Just my thoughts, so DYOR
cheers Lies.
(20min delay)