Saturday, March 12, 2011

Trade Update: EXK

What to do, what to do? That is the question with Endeavour Silver Corp. We picked up half a position long at $9.49 and now it would great to get the other half in the single digits here. But I don't want to pick up anything if the shares are going to crater. Are the shares going to crater? I have no way of knowing, but I did notice something on the charts by playing around with the moving averages, that will help manage the uncertainty.

First look at the $7.50 zone on the chart, the support there is strong and obvious. So, we will tolerate no serious breech of that area. What that means for us now is that our stop is the 50 dma which was $7.10 on Friday close.

The problem now is not whee to pick up another 50 shares, but where to place the stop at. Notice the green line in the chart. That is the 20 day exponential moving average (EMA), which sounds way more fancy than it is, but it has provided guidance for EXK since the beginning of the year. Through out January it was resistance and since it has acted as support. Right now it sits at $8.26.

So, this is what we will do. If EXK opens with strength on Monday we will jump in and put a stop at about $0.50 under the 20 day EMA. This will give us down side protection while allowing us to profit if the shares rise dramatically above 1$0.00.

We need to keep an eye on this because all systems are NOT a go. The stochastics are above 50 and falling and the selling volume remains quite high.

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