Thanks Miner.
First my disclaimer again....I am very much an amateur at charting. It is simply an aspect I am interested in. First and foremost I rely on fundamental analysis for intial stock selection. A little difficult with spec stocks such as PEN initially as they don't have an income as yet. Once I have selected a stock I am interested in
investing in, I then have a look at the chart for an entry point. I don't chase running stocks.
Yes with hindsight you could suggest it may have been better not to particiapate, but it depends on ones viewpoint.
I am an investor in PEN,
"I want and need them to succeed". By taking part I add to the coffers of the company and aid in reducing risk. By not taking part I buy a few more shares at market (without free options) and provide nothing of value to the company and only minimal value to me adding to the risk. I took all I could afford and then took what I could afford in the shortfall. My average buy now being below the current sp as well. If the stock goes lower, which IMO is now unlikely then I will dollar cost average. I don't do this with every stock only stocks with lowering risk and inherent high future value. PEN fits this perfectly for me.
That out of the way let's look at (descending/falling) wedges, not the potato or door jam kind but the Technical Analysis (T/A) kind
To start with have a look at this site, very interesting and put up for traders. Excellent simple explanations of chart patterns.
http://www.coveredcallswins.com/chartpatterns/BestBullish&BearishPatterns.html
Wedges - Falling
http://www.coveredcallswins.com/chartpatterns/image8UT.JPG
"
PATTERN CHARACTERISTICS
Bullish! -
The failure rate for falling wedges is very low at 10% while the average rise of 43% for this indicator suggest a profitable formation to trade. The highest price after the breakout is approx. the beginning of the trendlines. Pattern
Shape -
Two drawn downward-sloping to the right side trendlines that eventually must intersect. Use the trendline feature to draw the lines. Most formations have at least five touches. 3 on one side and 2 on the other side.
Trading Tactics -
Most falling wedges has a mininum duration of 3-wks or more. Anything less is most likely a pennant. Formations rarely exceed 4 months long.
Be ready to cover when the falling wedges come to an intersect."
If you also have a look at a "Broadening Falling Wedge" you will see the difference in the patterns with this pattern displaying a widening (broadening) bellows type pattern. This is a bearish pattern which is currently the case with the ASX200 amongst others. As opposed to PEN with a now very distinct "Descending Wedge" pattern. Basically they are the reverse of each other.
"Broadening Falling Wedge"
http://www.coveredcallswins.com/chartpatterns/image6gl.jpg
And some stocks simply fall into the abyss, similar to what occurred to Futuris, BMN and many others. Not sure what you call a pattern that simply spikes straight down...a spear maybe???
Distinct aspects of a falling wedge are described above but also it is noted as a fall on very low volume. When the wedge begins to close to an apex at the bottom and volume begins to build on the buy side the sp breaks up trough the wedge upper side. To confirm it also needs to keep going. PEN has had a couple of false breakouts recently, but they were breakouts from the wedge pattern none the less.
Some very good explanations and examples here:
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:falling_wedge
Hope this helps with your question on this a little miner.
Now for grades.
When comparing grades of U stocks look at the mining method to be used. ISR has very high recovery rates compared to convential mining. ISR will recover far more than the conventional crush and mill method, also at a far lower operating expense (OPEX).
The grades PEN is getting from Lance for ISR are excellent. ISR is now proven to be economical with very low grades of around 100/200ppm, conventional mines are uneconomical at these levels. So when you are averaging around 700ppm as PEN is yes they are good grades for ISR.
Have a look at PNN and why they decided not to go ahead, more correctly shelved for now until the U price recovers. Very high grades but conventional methods at very high OPEX/CAPEX costs. BMN was hit hard for the same reasons and I am sure more will follow, except PEN.
There is an excellent read on this subject here:
Exploding the Myth of Uranium
“Pounds in the Ground”
How Many Pounds Can a Company
Really Recover from ISR Uranium Mining?
The In Situ Recovery (ISR) Series
Part Two of a Three-Part Series
What you shouold focus on with ISR is Permeability (Darcy rating), this is the key factor in uranium recovery for ISR. A little known factor is that PEN at Lance has a Darcy rating 5 times higher than nearby Uranerz at Nichols Ranch Wyoming and higher grades indicated.
Glenn Catchpole is the CEO of Uranerz. They are going ahead with ISR in Wyoming on values far less than PEN is displaying.
"The make-break point for a formation’s permeability is its Darcy rating. How high is the Darcy? A typical Darcy can range from minus 1000 to plus 3. The higher the Darcy, the more permeable the formation and that would help determine how economic the orebody is. An acceptable range would be one-half to one Darcy. What is a Darcy? Catchpole said, “It is gallons per day over feet squared.” He added a pure hydrologist would calculate the feet per day or centimeters per second to get a more accurate permeability assessment. However, the Darcy is a widely accepted measuring unit in the industry.
Until a company gets its Darcy rating on its property, one can’t be completely certain the property can be mined by ISR. What guidelines does one depend upon? Catchpole said, “Historical research can give you permeability levels for a formation.” So we asked Catchpole how he felt about his Excalibur properties. He answered, “We know our properties are permeable enough.” How permeable will be answered with the pump tests."
Hope this helps and all makes sense a little Miner. I did this on the run between client meetings and have to go now, things to do and places to go.
Cheers and keep smiling
HS