Technical analyst Clive Maund explains why he believes both the fundamental and technical outlooks for this company look strong.
Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX) is certainly showing signs that it is turning up here, and so it should given the company's steadily improving fundamentals and the brightening outlook for the sector, notwithstanding any modest near-term correction. Links to articles about the company's improving fundamental situation will be added to this article later, but notable developments include the company undertaking its own drilling operations, thus saving money, performing assay work locally on Fiji and setting up a solar power facility to power its operations.
BREAKING NEWS: QUINTON HENNIGH TO BECOME LION ONE TECHNICAL ADVISOR. Hennigh was the driving force behind Novo Resources, which as we know turned out to be a spectacular investment for early buyers.
On the latest 6-month chart we can see that "something is going on" because Lion One broke sharply higher on good volume in January and has since been consolidating in what looks like a bull Flag that has allowed the earlier overbought condition to partially unwind and the 50-day moving average to close up the gap with the price somewhat and with the falling 200-day moving average—this is thus a setup that will lead to a bullish cross of the moving averages on the next upleg, the so-called "Golden Cross," which normally marks the start of a new bull market.
The 3-year is useful and interesting as it enables us to see in its entirety the grueling downtrend that started in August–September of 2016 and has persisted to this day, so it has been going on now for well over two and a half years, and the odd thing about this is that the company has been making great strides towards its objectives during this period, but you wouldn't think so to look at the chart.
We therefore have a situation now that is explosively bullish—and the good news for buyers here is that even after the sharp rally in January, the stock still hasn't broken out of this downtrend, so the news that Quinton Hennigh is getting involved should really light a fire under it. Here we should recall that many stocks had a big run-up during the first half of 2016, only to slope off into a long downtrend after the summer, but the difference between Lion One and many of them is the improvement in its fundamental situation that include the construction of an assay lab on Fiji which is nearing completion, the construction of a hybrid solar-diesel power plant to power the company's operations and the purchase of drilling equipment to facilitate further exploration at the company's properties.
The long-term 18-year chart is also interesting as it shows us that Lion One has had a long build-up to its soon to be enviable situation with its stock having made no net gain over the years—a situation that we can expect to change very much for the better going forward, and a breakout by gold into a major new bull market soon, as looks likely, will be the "cherry on the cake."
Lion One website.
Lion One Metals, LIO.V, LOMLF on OTC, closed at C$0.50, $0.386 on 28th February 19.
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.