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October 26, 2009 / Jeb

General Moly (GMO) Ascending Triangle Failure and Long Term Trendline Broken

Molybdenum has had a pullback along with the rest of the commodity market as the dollar is finding support at these very oversold levels.  General Moly which has had two high volume breakouts and low volume pullbacks show that there is institutional support pushing this stock higher this past year.  The low volume shakeout is demonstrating weak holders are selling their shares.

I do believe the long term picture for General Moly is bright.  We need to watch this stock closely as a continued downturn past this trendline would push it lower to the 200 day moving average at $2.

General Moly is a takeover target for larger companies looking to build its asset base.  Hanlong Mining just made a 700 million dollar investment in Moly Mines but admits it wanted to buy the assets cheaper during the financial crisis before the prices of mining stocks started appreciating.

As General Moly’s price gets cheaper and especially during the next dollar bear market rally I would not be surprised if there is a major investment in General Moly by either a larger miner or from China.

GMO

 

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