Thursday, July 8, 2010

AMOK Watch

Today's over-the-counter email catch includes Amarok Resources Inc. (AMOK), a gold and silver mining company based in Nevada.

In the email, an analyst named Eric Dany, claims chaos may produce $8,000 an ounce gold, amidst the rampaging Four Horsemen of the Goldbug: Economic Collapse, Debt Growth, War/Terrorism and Environmental Disaster.

Even the ticker symbol has an apocalyptic feel. "Lord AMOK raised his sword and smote the non-believers."

AMOK $1.20

He continues that all this badness is a chance to make 2,500% to 7,500% in profits.

Much as I hate to look an apocalyptic gift horse in the mouth, as a fact-based trader I can do none other.

AMOK has not been a strongly trending stock as late, and that accounts for the discrepancy in signals: Bullish psar, bearish Person's Proprietary Signal (pps), bullish but declining macd, neutral fast stochastic. And a fair low and declining average directional index. If this is a take-off stock, it has not yet begun its meteoric ascent. In fact, in trading yesterday (and so far today), the open and close are identical.

One important fact about AMOK is that it is illiquid, with volume generally under 300,000 shares (and some days below 50,000 shares). It's easy to get in, but it may not be easy to get out, should Mr. Dany's scenario fail to play out.

A second is that AMOK hit its peak in April at $2.75, and has since lost half of its value on declining volume. It's not a stock on the move as yet.

AMOK's most recent quarterly financials show it spent $865,916 and had revenue, from interest, of $296. That's a loss of $865,620.

A company news release, dated April 14, says it has selected a drilling contractor for its property at Carlin, Nevada.

So, what we have here is a story. From AMOK, it's a story of a start-up company that may or may not ever make a dime. From Mr. Dany, its a story that has little to do with the company and everything to do with economic end-time visions, the Wall Street equivalent of the Book of Revelations.

Clearly, by my rules, this stock is pure speculation and I wouldn't trade absent some indication that AMOK had found minerals. Mr. Dany's story makes any gold company, or gold itself, an appropriate play. There's no need to add to the risk by speculating in a nearly revenue-free company like AMOK.

Reversal Levels
  • $1.45, +20.8%
  • $1.37, +14.2%
  • $1.20 <== You are here.
  • $1.10, -8.3%

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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