running hot, page-2

re: running hot/catherine davey today FOR INTEREST

Catherine Davey
Sherlock Bay Nickel Corporation Limited (SHN)
By Catherine Davey, 19 Dec 2005



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Analysis

SHN has been a volatile junior. It listed in late 2003 and immediately rallied before retesting and rejecting the downside, albeit with new all-time lows in May 2004. A rally from those lows went to a fast high of 23.5c in September last year. This was followed by a dip and retest and rejection of those highs two months later. When the price closed below the intervening low of the twice tested high at 13c the downside target was 2.5c. In September this year SHN reached lows of 3c. Since then it has tested and rejected those lows on two further occasions.

Outlook

SHN has formed a potential double bottom pattern. The extremes of that pattern are at 3c and 5.4c. A close above 5.4c would confirm the pattern and give a first upside target at 7.8c. That price also coincides with the Fibonacci 23.6% retracement level based on the all-time highs to all-time lows. However a general move higher in nickel stocks should see this stock go well beyond that target, possibly testing and even moving beyond the old highs. A close below 3c and the potential for a new uptrend is over for the time being.

Support:- 0.038; 0.03

Resistance:- 0.054; 0.06; 0.078; 0.105; 0.13