Gediminas Jasionis
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Greed Moves Selectcore Ltd. (CVE:SCG) (PINK:SLXXF) Share Price Up

by Gediminas Jasionis Feb 11, 2011
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scg_chart.pngSelectcore Ltd. (CVE:SCG) (PINK:SLXXF) has broken into a few days rally on increasing trading volumes as a reaction to technical price breakout.

Trading volume hit the 4 million mark as the price spiked up more than 64% on Thursday. No news or updates were issued to help the price advance. As always, the volume partly comes from short squeezes, and the lack of material events means that this price advance likely won't last for very long. The possibility of sharp retracement is further nourished by a humongous market cap growth, which was caused by share price jump.

Erratic price rallies usually bid on quick exhaustion because the buyers are forcing share price way above the safe levels, as there is not enough supply at the lower prices. As greed of the crowd fades, the price cannot advance further and tumbles back down on profit taking and panic selling. Since there was no news to support the inflated pricing, the process is sure to be quick.

selectcore_logo.jpg$12 million market cap doesn't seem natural for a company with a negative net tangible worth. Even if they have millions in revenues, their gross profit margins are so low that they barely pull of small profits one quarter per year.

Poor stock liquidity also appears troublesome, for those buying into the price rally might end up with shares they cannot liquidate.

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