Bulls succeeded in disturbing the established downtrend in Cline Mining Corp. (TSE:CMK
) (PINK:CLNMF) share price, but the buyers still lack determination.
CMK short-term price rally has been accelerating over the last three trading sessions after the stock broke out of a downtrend by the end of last week. Despite some buying pressure, Cline stock had week trading volume of 1.96 million over the last push, which was lower than the 90-day average of 2.4 million and means that bulls are not convinced of an opportunity here.
This spike up might be just another correction on the way down. There were similar U turns in January and March and all ended up as noise in the general downtrend. This time is a bit different because the stock has some support at $2.00, however, it seems pretty week, judging from the price action around the area in October 2010.
Another reason why this rally will likely end up as a short-term correction is the lack of news that would support the move. The latest update Cline has published came out on June 9. It was a purely technical report and only got the traders excited for a short bit.
The fundamental situation shows that the share price could drop a little bit further. Market cap of $524 million is 4.3 times the net tangible assets, and this value could drop to 2 - a standard valuation for start-up mining companies with no revenues.