Although Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX; LY1:FSE) hasn’t done much since we nibbled at it back in September, aware that it could continue the basing process, its technical condition has certainly improved to the point that a new bull market is looking much more likely soon, and it just so happens that during the night the company came out with impressive drill results that are thought likely to get the stock moving today, especially as the pressure is coming off the sector after yesterday’s dramatic reversal in the broad stock market.
Whilst Lion One’s performance in recent months doesn’t look impressive on its 6-month chart, as it has basically continued to bump along sideways above an important support level, when we look more closely we can see technical evidence that a new bull market in the stock is brewing.
"This is a great buy spot for Lion One."
The first bullish point to note is the high volume rally in November that drove the price into the still falling 200-day moving average. This move is regarded as a preliminary breakout, and it was not surprising to see the price give back the gains due to the still unfavorable alignment of moving averages; however, the price and moving averages are now starting to bunch together in a manner that often leads to a breakout into a new bull market, and today’s news out of the company may well be the catalyst that triggers the breakout.
Another bullish point to note is that there was not much downside volume on the reaction back from the November high, which is a reason why the Accumulation line has held up well on the reaction, which also bodes well. Lastly, yesterday’s candle at the support was positive as it accompanied by a marked increase in upside volume that drove the Accumulation line higher despite the stock closing down on the day.
The 3-year chart shows the entirety of the correction from the August 2020 high and we can see how it had run its course by last June, since which time it has been bumping along sideways above the strong support level shown marking out what looks more and more like a base pattern that will lead to a new bull market. The increasingly tight bunching of price and moving averages is more evident on this chart and as mentioned above this is a potent setup that often leads to a breakout, with the recent lack of interest shown by the generally light volume another positive factor, since Smart Money tends to buy when the mob’s attention is elsewhere.
The conclusion is that this is a great buy spot for Lion One, as in addition to the excellent drilling results out today, there was a dramatic reversal in the broad stock market yesterday (maybe the Fed just created another trillion) and a parallel reversal in the precious metals sector with a bullish candle (dragonfly doji) appearing on the GDX chart. While the price is obviously likely to be positively affected by the news, it will probably take a while to filter through to many investors, some of whom may still be shuffling around in their carpet slippers with a bowl of Cheerios having stayed in bed with the wife. So with a bit of luck we can do some buying in the early trade before the price gets moving in earnest. Lion One is rated a strong buy here for all timeframes and not regarded as particularly speculative.
Lion One Metals website.
Lion One Metals Ltd, LIO.V, LOMLF on OTC, closed at C$1.01, $0.79 on 24th January 22.
Posted on CliveMaund.com at 9.05 am EST on 25th January 22.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.