Sunday, August 26, 2007
The weekly chart of Impact Silver is notable for a couple of things. The recent sell off shows how easily relatively small volume can chop a considerable amount of market cap off a stock. Now the stock is right at the uptrend line and also at the 100 week EMA. This area was support for the stock during the first wave down of this consolidation in the fall of 2006.
Looking back further, the stock consolidated for several months in 2005 after moving up steadily from mid-2004 to peak well above the long-term moving averages. The consolidation we are in now is a similar shape but much larger magnitude. The increase in volume over time corresponds to higher price levels and greater price swings on run-ups and corrections.
I don't worry too much about Impact Silver. They are a real company that is producing silver today and steadily increasing production. The market's perception of the company may vary wildly from one day to the next but the professionals running the company continue moving it forward regardless.