Timmins Gold Corp. (TSE:TMM) (PINK:TMGOF) had the stock price rallying after one institutional owner converted some warrants.
TMM share price shot up nearly 6.8% on Thursday, generating significant but not spectacular trading volume. 1.12 million shares were traded during the session, which was twice the 90-day average of 547 thousand.
The buying pressure was related to the conversion of warrants, described in an alternative monthly report which the company released on September 8, 2011. The update described changes related to conversion of 1.12 million warrants into 1.95 million common shares by institutional owner Sprott Asset Management LP. This resulted in dilution to shareholders of roughly 1.4%.
The stock price rally stopped at $3 per share, which could serve as strong resistance due to its psychological impact. The stock has a history of similar sudden spike-ups and every time the move was followed by a gradual decline. These two factors combined with the nature of the news makes strong impression of impending correction.
Outcomes of the previous rallies suggest there is a substantial possibility of TMM stock price returning back to $2.80 over the coming half a month without actually drifting away from the established uptrend.
