First Lithium Resources Inc. (CVE:MCI) (PINK:FLNTF) spiked up significantly yesterday despite the lack of catalyst to drive the rally.
MCI share price gained 62.5% yesterday on a trading volume that topped 11 million and was nearly 14 times the average of 747 thousand. The stock passed an important resistance at 16 cents, which helped to accelerate the rally.
No news was out to trigger the rally, so it was most likely fueled by short squeezes, which later grew to take out resistance.
The last update to cause a similar price reaction was published on April 25, and stated they completed a drill program at Mollie River. The update had called out a noticeable stock price reaction back then, thus it might also be a second spike induced by the same news.
Despite the massive gains and clearly positive sentiment towards the end of the trading session, the share price is very likely to pull back soon. The last rally did the very same thing after two days of spiking up.
Currently, the support is at 16 cents, which previously served as resistance. Such rallies are also prone of morning panics – a rapid share price decline in the morning caused by profit taking and panic selling.
