Catalyst Copper Corp (CVE:CCY) (PINK:CATXF) gapped up on Monday and closed with 14% gains on no news, thus the further price behavior could follow the rules of a common gap play.Outstanding trading volume might have come from short squeezes. If this proves to be a common gap, traders should expect to see a gradual decline in price until the gap is covered. A similar situation happened not so long ago, except the price spike didn’t include such a wide gap.
20 cents was the key level CCY stock failed to stay above the last time the price tested these grounds. Intraday, the price slowly declined for most of Monday’s trading session. Such action shows that short-term profits are currently prevailing over the long-term potential of the stock.
The company has recently started preparations for diamond drilling on the La Verde project in Mexico. This had a major impact on the share price, adding to the short-term uptrend. However, the company will require around $2 million to complete the phase 1 of 2011 drilling program. That is more than half of their current working capital, which means stockholders will likely see more stock sales and dilution in the future.
In the meantime, the market cap of $42 million appears to have extended to its upper limits for this $13 million net worth company with no revenues.
