NAK: Two timeframes, two stories

Posted by barkand on December 19, 2010 under Price trends | Be the First to Comment

I had been watching Northern Dynasty Minerals (NAK) this week hoping for a good entry point. The stock had jumped from $10 to the mid-13s in just a couple of days and I was looking for it drift back down to around $12. It would have been really swell if I had spotted it at $7 a few months ago, but here we are.

As you can see from the chart, the market did not want to cooperate with my wishes, and the shares never really dipped below the high 12 area – about 6-7% higher than what I was hoping to pay. After a few days of rest on low volume, the shares popped up to close at $13.39 on Friday, on higher volume. I won’t get it for the price I wanted, but this does look like a stock with a high probability of giving us a quick 3-5% profit before Christmas. The only question is whether we should buy one truckload of shares or two.

Not so fast! Let’s take a closer look at the price action on Friday, via this 5-minute chart from BigCharts. I would have expected that other people as desperate as me would have been buying shares at the end of the day when they realized they are not going to get their wish price. Instead, the opposite happened. There was alot of selling pressure in the last 30 minutes of trading. Why? I don’t know.  

That last 30 minutes isn’t a deal breaker. But it does make me want to be more cautious. I think I will just wait and see how the price action unfolds on Monday.