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Diamond Stock Set to Put in a Sparkling Performance
Contributed Opinion

Source:

Technical analyst Clive Maund charts a diamond company that he rates a strong speculative buy.

If you are a speculator or trader who doesn't like to wait weeks or months for an investment to pay off and wants to see results within days or even hours, this one is for you.

Lithoquest Diamonds Inc. (LDI:TSX.V) blasted higher around the start of the month with a gap move on massive volume, due to news of a discovery, as we can see on its latest 6-month chart below, and after continuing higher for a few days to become extremely overbought short-term, the usual reaction set in, which brought it back towards what is now strong support in the C$0.44–C$0.47 zone. This reaction has the classic signature of a countertrend reaction in a fast moving market, as it has been accompanied by a rapid die back in volume and a convergence of the price oscillations into an increasingly tight range—in other words it is a fine example of a bull Flag or Pennant within a powerful uptrend, which means it should lead to another sharp upleg very soon. Another bullish indication on this 6-month chart is that both of its volume indicators have remained elevated as the correction has occurred.

The 3-month chart enables us to see what is going on in a little more detail, and gives us an opportunity to append the RSI and MACD indicators to the chart. The former has already almost completely neutralized and while the latter, the MACD, has a long way to go before it has, its histogram has already corrected all the way back to the zero line and in a fast moving situation like this, that is enough to create the conditions for another upleg.

This bull market in Lithoquest began with a large gap on massive volume, and the rule is that the bigger the gap and the higher the volume, the more bullish it is. It is most unusual for a move like that to lead to a "flash in the pan" advance—normally it leads to a bull market that lasts for many months and sometimes years. This is another big reason why it is likely to advance from here.

Lithoquest is rated an immediate strong speculative buy, and risk may be limited by placing a stop below the apex of the outer Pennant—outer because a breakdown from the inner one would not spoil the pattern, and we can see that there is strong support at and above C$0.50. Lithoquest trades in hopelessly light volumes on the U.S. OTC market where for this reason it should be avoided. There are 45.9 million shares in issue.

Many years ago the Diamond Marketing Board or whatever they called themselves did an excellent job of connecting diamonds with the proposal of marriage, so that young men intent on this would scrape together their usually meager funds to buy a diamond engagement ring, which women have always had a marked tendency to keep if things didn't turn out so well, and of course they may have been a driving force behind songs such as "Diamonds are a girl's best friend." There is just one problem with this video—the gender ratio is incorrect, instead of 10 men to 1 woman, it should be 10 women to 1 man.

Lithoquest Diamonds website.

Lithoquest Diamonds Inc., LDI.V, closed at C$0.59 on 20th April 18.

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.

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Disclosure:
1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Lithoquest Diamonds, a company mentioned in this article.

Charts provided by the author.

CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.




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