Opinion with Eastern Platinum (ELR TSX)

[bazarbania]

I am looking for expert opinion on ELR-T (Eastern Platinum Ltd)

I have been watching this stock for past month when it started with price of $0.98 and it had touched $1.50.

I wanted the opinion as should it be

BUY/SELL or HOLD at this positions

Thanks in advance

[bryanmcn]

HI
Tecnically ELR is in an uptrend but has been consolidating since mid January. If you buy here (at around $1.30) I would set a tight stop in the $1.05  - $1.10 range. Make sure that the $.25 risk does not represent any more than 1 - 2 % of your total portfolio. 
Good luck!
Bryan

[garilou]

Hi bazarbania,
Here is another "expert" opinion about Eastern Platinum.

On February 1st, one of the CEOs gave an interview to Reuter that you could find when you Google it.
He gave 4 majors reasons to be optimistic:
 * Sees higher demand from Chinese auto makers - CEO
 * Platinum to regain $2,000/ounce plus level in 2010 - CEO
 * To sustain avg $1,500-$1,600/oz level for next few yrs
 * Sees major SAfrican producers cutting production in 2010
 * Sees 2010 output 150,000 PGM ounces at $700/oz

Although the long term trend of this stock seems up, I think that you should wait a little bit before you buy, for the following reasons.

• CEOs for sure always see good prospects for their company, but at the same time... they sell! In January and mostly February, you have Officers and Director who sold in the ranges of 1.240 -to 1.51 not negligible percentages of their total holdings.
• As you said the stock went up a lot ( 52 weeks 0.34-1.50). Sure it is heavily traded, so those who bought at 0.34 are not the same as those who bought at 1.50, but certainly there will be lots of profit taking.
• In the moment, the stock is "stocked" between a strong resistance around 1.30 - 1.31, and a support around 1.26. So at 1.28 (Fridays' close) you are closer to the support than to the resistance. See if it jumps back up, and mostly if it breaks through the 1.31 resistance.
• Short position have increased tremendously: from 555,312 (Jan.15) to 1,537,471 (Jan. 29): not a good sign, because people who short think a lot before they do so! (I am a passionate shorter  )
• The stock lost 3.03% on Friday while Platinum fell 6$, which is very little (-0.4%).

Stocks related to commodities very often over react to commodities movements.
So you should check carefully those movements.
You could visit one of sites that I check the most for commodities, http://futures.tradingcharts.com (specifically for Platinum, go to http://futures.tradingcharts.com/chart.php?cbase=PL&market=PL&cterm=40).
You can see the chart, but more important, read the very complete analysis: you will see that the different indicators are mixed:
from:
"oversold territory",
"Long Term, EXTREMELY BEARISH"
"Market trend is DOWN."
to:
"The long term trend is UP",

and lots of others, that mostly tell us simply that: short term bearish, long term bullish.

Another weakness sign: the recently created ETF (Ticker:PPLT) (ETFS PHYSICAL PLATIN) did great in the first days, but keeps falling.
Look at it on Google Finance:
http://www.google.com/finance?q=NYSE%3APPLT.
Choose the "Max" for the time scale, and then compare to the TSX (which contains so many stocks related to commodities): To compare insert: TSE:.GSPTSE in the "Add" text box.

Because Gold and Platinum often go in the same direction, you can also look at the ETD PowerShares DB Gold Fund (Ticker NYSE:DGL), which owns future contracts, also on a one month scale, and compare with the PPLT, on a 5 days scale... Friday, for the first time the PPLT did worst then the DGL: not too promising for the short time.

Whether the CEO was right or not, the stock follows the TSX down trend.

In conclusion, I would not buy and put a stop, (sorry again, Bryan), I would wait, keep checking as you did for the past month.
So maybe you could simply wait till the MTI from SSP turn UP again?
Better buy possibly a little higher, more probably a little lower, but when an up trend is clearer.

Hope this helped make a decision.

Louise
PS: For ethical reasons, I do not buy gold or other mining stocks, especially if they are mostly based in Africa.
My "mining" stock is BioteQ Environmental Technologies Inc.(TSX: BQE) which specializes in cleaning up the mess left by the mining industry... and it does pretty good. I just bought it for the second time....

[bryanmcn]

Bazarbania
As you can see Louise has spent a great deal of time researching and gathering information and then making logical conclusions about the data. You should be aware, however, that everything that Louis knows, many others also know. The information is historic and already built into the price. Louise may offer her own unique analysis of the combination of bits of data which may cause you to “fall in love” with the stock and hold it even as it drops and you loose money.

I invest and trade for one reason; to make money. Here is my approach;

1)   Buy stocks that seem to be breaking out of a long term flat trend. This has been shown to work for the past 20 years by many traders, although the volatility is high enough to keep the average investor from using the strategy.
2)   Know your stop BEFORE you invest. Let the winners run and cut your losers by setting stops and increasing them as the stocks rise.
3)   Limit your potential losses (based on your stop) to no more than 1 – 2% of your total portfolio.

It is amazing how few people trade this way. I don’t watch the market every minute of the day but I check several times per week. I can hold 20 or 30 positions and make adjustments in only a few minutes. I never fall in love (or hate) with any stock. Been there, done that! I go long only because I can’t short in my RSP.

In 2008 when the markets dropped 50%, I lost 7%. Since 2005 my portfolio is up over 170%.

I don’t expect many traders to follow these simple rules but it pains me to see the same mistakes being made over and over so I throw in these thoughts to those who might care.

Bryan

[DCA]

Hi Bazarbania,

1)  Chinese market currently oversupplied with new vehicles.
2)  US and European automakers in a downturn.  (and how about them Toyotas?)
3)  80% of current consumption is auto catalytic converters.
4)  SA producers closing because of oversupply.

Only invest in this stock if you believe in the greater fool theory or you know that next week someone will be announcing a working cold fusion reactor that uses plantimum as a catalyst.

D

[garilou]

Hi DCA,
I appreciate that you talked directly to Bazarbania, and did not comment on my post and/or Bryan's reply.

I also like the way you replied, this was a third approach, informative but also in a way humoristic! (is this English?) to the same question, which makes it interesting.
You seem to say: "look somewhere else" don't you?

Could you just tell me what you call the "the greater fool theory"? Are you talking about "The Motley fool"?
-.-.-.-.-.-.-.-
And Hi Brian,
I am not sure why you replied the way you did to my post.
And you certainly did not read mine, (admittedly it was long to read it till the end).

Could you tell me where I presented "bits of data which may cause you (Bazarbania) to "fall in love" with the stock", and still worst:  "hold it even as it drops and you loose money"?
Thanks for the "gathering information and then making logical conclusions about the data."
But my conclusion was : do not buy, while yours sounded like "buy and put a tight stop".

I never buy a stock by "falling in love" with it.
I do avoid certain ones, as I said, for ethical reason.
I also avoid some stocks, that I just "don't feel", because LOTS of people do fall in love with a stock, and hold so long, even when they are loosing a lot of money on it, and this makes me not understand that stocks's market.
(I think about some fanatics about Research in Motion, Apple, or Harley Davidson, for exemple, people who buy stocks of the products that they personally like!)
Now who would fall in love with a Platinum producer?

And yes, I did "spent a great deal of time researching", as I always do.

You are presenting your way of trading, and, although we sometimes disagree, I have always admired your trader's talent and methods.
You are cleverer then me, because I could not handle "20 or 30 positions" at a time, maybe because I do take some risks some times, and I have to watch more closely.

This is not a contest here, but if you want to start it, "In 2008 when the markets dropped 50%", I lost 0.05%, excluding my RRSP (so without any short but some bearish ETFs) where I gained 4.5%!

I can't compete with your 175% since 2005, since this is the year when my husband became very ill until he died in 2007, and it took me quite a long time to start investing again. Surprising enough, while he was so sick, and mainly during his many long periods in the hospital, he traded a lot, and almost doubled the worth of his RSSP during his sickness!
Anyway, I do not want to compete, I want a fun place to be.
The idea of this forum, as I understand it, is to exchange and help each other, and not to prove that we are the best!

You write: "You should be aware, however, that everything that Louis(e) knows, many others also know.!"
I agree  100%, but Bazarbania was asking a very specific question for a very specific stock: "BUY/SELL or HOLD?".
Seemingly he did not know how to make his decision, so I made my research as if I was considering that stock as a potential buy.

You explained your way of choosing a stock, and gave a sort of course on a strategy.
I know that you do not mind being out of topic, but your post should have been in the "Your Succesful Stocks Picks and Strategies" forum.

Back to the topic: in order to help Bazarbania, in this very specific case, applying your rules, could you tell us clearly  if this stock corresponded to one that you would have bought, (even with a tight stop), as you told Bazarbania to (with a protective "If you buy here").
-.-.-.-.-.-.-.-
And finally,
Hi, Bazarbania, did our three "expert opinions" help you make a decision?
You have been pretty silent since you posted your question.

Louise

[bryanmcn]

I say don't buy. There are better positions to enter.

[DCA]

Hi Louise,

     It should be noted that I never looked at the actual stock in question.  My comments were on platinum in general.

     I have never been a great fan of the Motely Fool method.  Most of the stock picks that I have done quite well with would be rejected by the 'Foolish' system.

    The greater fool theory is what propells things like Bre-X.  Momentum begats momentum...and then someone lets the air out of the balloon.

    I prefer fundementals and temper my choice with some "the markets ability to remain irrational exceeds your ability to remain solvent."

    Bryan is correct somewhat with his "historic" comment, but what I like to do is find the "irrational" priced stocks that the market has not made the information "historic", then wait for the market to start to build this into the price.  (Historically, I have made the mistake of buying a stock too soon or not selling quickly enough when the market insists on remaining irrational.)

D