Chilean Copper Stock breaking out in a big way
The stock broke out in late November, and recent price action suggests there might be the potential for a nice second entry point.
Atex Resources is a stock that continued to show up in my scanner over the last couple weeks, but I missed the initial breakout point, where the stock nearly doubled in a very short time. It is has now started its first pullback and if the initial breakout line can hold, will present a second entry opportunity. Let’s take a look at the weekly chart first.
As you can see the breakout was powerful with elevated volume for a few weeks, during last week’s sell off the stock held up relatively well, I would like to see the breakout area of .70 cents hold on any pullbacks. Okay so let’s take a look at a few of my criteria when looking at this stock.
Market Health - The stock market had a rough week and if that trend continues that could present a real headwind for mining stocks again, it could cause the stock to chop around and or cause a failed breakdown. So with that in mind, it’s important to have a good risk management if taking any positions.
Sector Health - Copper stocks have been acting really good and have actually proven to be a stronger area of the market. There hasn’t been alot of huge breakouts but they have been grinding higher. The price of copper has bounced back nicely as well. With potential China demand helping to support price.
Relative Strength - The stock has been performing extremely well in 2022, which is very impressive due to market conditions. It has outperformed the $SPX for most of the year and is doing so again.
Volume - The stock has had elevated volume for a few weeks as lots of buyers came in and drove the price up. During last week’s sell off the volume was much lower than when the big breakout happened. This is a good sign, if selling volume starts to get heavy that is a big red flag when watching a stock.
Resistance - One of my favourite things about this stock, is that once above 1.00 there really isn’t any resistance left, which could let it fly higher much quicker. It’s a quality of a winning stock.
Moving Averages - Both are turned up and have alot of catching up to do now, which leads to me believe the stock could take a breather for a little while. Which is often the case of something that runs this hard.
Okay so technically the stock has alot of potential, let’s take a look at the fundamentals and story of the company.
The company is focused on the Valeriano copper/gold project in Chile, there has been some drilling done on the property already in the past and they had some of the best copper intercepts on the planet. They hit an interval of 1160 metres at .78% CuEQ, that’s a massive hole. The company is currently valued at $93 million Canadian.
The company is cashed up right now and started a drill program in the fall, so assay results could come out anytime, which gives this stock even more upside, if they can deliver drill results like that again. Pierre Lassonde owns over 10% of the company, he is a good person to have involved no doubt.
The companies property is in the same belt as some of the best copper companies in the industry. It is in the same copper belt as Filo Mining, take a look at a price chart of that company.
The company has only completed 5 drill holes on the property in the past for 7500 metres, they have an inferred resource off of that drilling. But you can see the potential to add pounds here if they can continue to drill this thing and discover the size of it. The company is planning to do a minimum of 10,000 metres of drilling this time around. You can see the potential for a re-rate here if they can deliver.
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