Trend traders often look to cyclical events in the lifespan of a stock. Whereas many stocks tend to roll with the ebb and flow of the general markets, for some industries, such as biotechnology and mining, there are more specific times when stock movement is typically more predictable.
Milestone events, perhaps entering clinical trials for a biotechnology company, spawn anticipation for investors which will create some buying pressure. In the world of mining, production obviously is a major milestone, but other, much earlier milestones also can breed buying and signal the start of a cycle.
In the case of Denver, Colorado-based Force Energy Corp. (OTCBB:FORC), a junior lithium and rare earths mineral exploration company, a pop off the bottom happened Monday. The move seems to be based upon a combination of an early trend of a cycle, some news and a chart that was forming another base.
The company owns two primary properties. One is an oil and gas project in for which it maintains a 50% working interest in County Line Energy Corp.’s interest in the Hayter Well located in Alberta, Canada. The well was spud in 2007. Due to lower results than expected, the well was capped for the meantime, but still has possibilities should oil and gas prices continue to rise.
The second project is the Zoro 1 Lithium Property in west-central Manitoba, and it commands the primary focus of the company. Force Energy holds a 100% working interest in 52 hectare property located in the Snow Lake region of Manitoba. Historic reserve estimates for Li2O (Lithium Oxide) has been determined, but was based upon limited drilling for which Force has been targeting validation and expansion. Total undiluted tonnage has been indicated as 1,727,550 at 0.945% Li2O.
Today, Force Energy reported that Phase 1 due diligence on the property has been completed. The research, consisting of locating, power washing and channel sampling spodumene-bearing pegmatite in 16 trenches on the property, confirmed the previous non-compliant NI 43-101 resources. According to the company, "[new] diamond drilling will provide a current grade and tonnage for the deposit and assess the potential to expand the resource."
Technically speaking, shares of Force Energy had been trending on a base in the area of three cents -- with sporadic climbs to five cents -- for several months. The news today brought another sharp climb back to touch five cents, representing a nearly 40% premium to Friday’s closing price. Based upon the resistance at a nickel, traders may be keeping an eye on FORC as a break of that channel could indeed be a bellwether to the start of a cycle that often times begins at the commencement of drilling on a project.
