MacDonald Mines Exploration Ltd. (CVE:BMK) (PINK:MCDMF) stock price gaped up on speculations and trading now goes on relying mostly on technical aspects of the price movement.
BMK stock price had gaped up 25% soon after the session started today. The daily trading volume quickly reached 1.5 million shares which was the heaviest recorded over the past year. Share price also hit a new 52-week high at 23 cents, prolonging the preceding price rally and clearly overextending. Profit taking already began to manifest, which means bears might have some sweet profits if correction hits hard enough. Such overextending rallies tend to correct as quickly as the price went up.
The stock price moved up on speculation about the start of drilling on Butler 5, the company’s primary nickel target. MacDonalds is known to lag with official press releases thus the market starts to get speculative when there are uncertainties. The company announced results of insight geophysics survey on March 28, which left traders excited.
The fact that there was no real news just amplifies the chances of a large scale correction to come over the next few sessions. The company’s fundamentals could support the market cap of somewhat $50 million, but not without any new developments.
On the bright side, the rally has set a precedent on what to expect when MacDonalds announces the actual start of drilling.
