Big green bullish engulfing candle on Friday on little volume indicates a potential trend turnaround. Mind you looking at individual daily candles on the HCH chart is not so useful as it often volatile intraday with low liquidity. Note the similar candle back on 25 Feb.
Here is the same chart with my scribbles over it.
The share price has retraced $1.01 (*38.7%) from Oct to Dec '21 in a fairly orderly sell-off within a tight trading channel. After a short mid-January recovery it started another leg down once the traders were back at their desks, retracing 67c (34.9%) representing a total fall over six months of $1.36 (52.1%).
Note that on 24 Feb the price closed down well below the descending support line. This was the trigger/pivot point for a spring back up to the top of the channel followed by a re-accumulation.
A bearish megaphone pattern emerged over April/May as the share price made some recovery.
On 11 April we had three million shares transfer @ $1.47 in an after market cross-trade at the end of a day where there was little spread in the price. This shows on the chart as a spinning top candle with a huge accompanying spike in volume. A Spinning top doesn't tell us much by itself. It is a sign of market indecision. It is a warning to pay attention.
The spinning top of 11 April was followed by a few days of rallying followed by a distribution. Whoever bought all those shares may have traded them. I don't know as I don't get broker data. Again I observe that individual candles can be difficult to interpret on the HCH daily chart, but note the sequence of candles starting 21 April, which was a spinning top, indicating indecision. This was followed by three hammers (indicating potential reversal). The tails on the hammers indicate that traders may be successfully holding the price up as they sell into the top. The bullish engulfing candle of 28 April was a false signal.
Looking at the Fibonacci retracement levels of the the Oct '21 top to Feb '22 bottom, key levels have been rejected during this recovery; 23.6% was rejected in early March and 38.2% in April.
The good news is that we have three higher lows in (assuming yesterday's open represents another low). I don't think this is a very strong signal however because now we just have a broader megaphone and other factors weigh on my assessment of likely price movement. They are:
1. We still have two weeks before options expiry,
2. The market is broken and liquidity is leaving the market, so any further market sell-off could be brutal,
3. The market is probably not anticipating any news catalyst over the next few months that would sufficiently excite the market:
a) PFS promised for 3QCY22 means could mean end of September.
b) Someone kindly posted an interview with CE with s t o ck h e a d the other day, and CE casually let slip that the touted new drilling at Productora (Productora east?) is in fact sterilization drilling. I interpret this to mean it may be more to do with sterilizing the site of the ROM pads, plant, etc rather than any targeted exploration. Hmmm. Can you trust the spin that CE puts onto things? Nod, nod. Wink, wink, Sideways glance.
c) even some good hits at the satellites may not be enough to raise the share price if no-one is buying.
I'm very bearish the overall market. As I posted here a couple of months ago, I think most investors will underestimate the consequences of the Ukraine war. Throw in the China lockdown and the global economy is in strife. The consequences that will flow through into financial markets are, as always, probably unknown. Once markets and financial systems become illiquid then we find out where the system breaks this time around.
I am predicting that the share price will retrace below $1.25 before any rally. I wonder whether any window of opportunity to trade the stock from here would involve selling before the PFS is released. I'm generally not motivated by trading but because most of my money is in a SMSF I don't really get any tax penalty from realising capital gains. I had expected that I would probably withdraw my capital and only leave my profits free carried heading into a PFS. The fact is I sold out over April having only realised a pitiful capital gain after holding this stock for two years and trading around a core holding. If I hadn't have traded it over that time I would be under water.
I'm sure long term holders will see significant appreciation from here and I hope to buy back in but at the moment I am mainly in cash and looking to protect my capital and looking to see what unfolds over coming weeks.
(20min delay)