Gediminas Jasionis
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Pershimco Resources Inc (CVE:PRO) (PINK:RSPRF) Price Goes Higher With No News In Support

by Gediminas Jasionis Mar 8, 2012
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pro_chart.pngPershimco Resources Inc (CVE:PRO) (PINK:RSPRF) stock price broke out on Wednesday but has little reasons left for further price appreciation.

PRO hit a new multiyear high at $1.50 per share under a trading volume close to 1.9 million, which was significantly above the 90 day average of 294 thousand.

The company had no worthwhile news that could justify such a breakout at this point. The technical signs for this breakout were scarce, although the price had poked slightly above the $1.30 resistance the day before. It could be easily missed on technical scans thus most of the traders only came in when the big move had already started.

Despite the lack of strong fundamental backbone to the breakout, it still carried a significant trading volume and ended the session without showing weakness. Even if some profit taking hits the floor this morning, the buying pressure is likely to remain strong as well and that would create an interesting session with plenty of trading opportunities.

pershimco_resources_logo.jpgThe current market cap of Pershimco reaches $186 million. That's slightly less than 2.9 times their book value and calls for some backing from the top and bottom lines on the income statement. The problem is that Pershimco still remains an exploration stage company with no revenues and relies on issues of shares and warrants to raise working capital.

On their last quarterly report the company showed to have over $9 million in cash but had since completed a $30 million bought deal financing, the announcement of which was originally behind the most recent share price uptrend.

Clearly some traders would want the news to continue having the bullish effect on the stock, but the market cap needs to stay realistic and it has already stretched farther up than the underlying worth, even with the most recent cash infusion included.

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