Genco Resources Ltd. (TSE:SLX) (PINK:GGCRF) started to roll back down after another run-up attempt. With no recent news it might very well end up forming a double top pattern and crash down.
The share price has been rallying up since the company started exploitation of the La Guitarra property. They claim to be in a strong financial position, able to retain considerable revenue growth rates in 2011.
Genco entered 2011 with over $26 million in cash. At the current cash burn rate, this capital will be enough for another couple years, so this at least spares the potential share dilution arising form funding deals. Losses are still going big, and might result in quicker cash burn rate when the management tries to boost production.
Share price is swinging on the higher grounds, compared to the performance before exploitation began, but the large amount of shares outstanding results in big market cap changes with every tick. The company has to pump up their production rates before traders can hope SLX stock to rally further up.
Short term rallies with no big news for an extended period tend to evaporate really quick. The key support level currently lies at 75 cents. Breaking lower can result in panic selling. Another minor support at 80 cents might also prove to be important in sustaining the inflated pricing.
