Things are looking up for the broader equities markets as the S&P 500 seems to have clawed back much of the losses experienced so far this quarter. In times like these, it makes it a little easier as a stock picker since there tends to be a shift in sentiment to more of a FOMO mentality. Nonetheless, the process must remain the same on our end as we sift through our watchlists and screeners in order to bring you, the reader, a fresh, daily pick. Without further ado, let’s dig in to our latest find; Enduro Metals Corp (TSX:ENDR).
Background:
Enduro Metals Corp is an explorer focused in the heart of British Columbia's Golden Triangle. The company's projects include McLymont, Burgundy, Cuba, and Chachi. It also holds an interest in the Tom Cat Project located southeast of Merritt in south-central British Columbia.
ENDR Trading Strategy:
Due to the recent surge in momentum after the stock broke out of its downtrending resistance (shown in blue) as shares closed at $0.255/share (+21.43%) on Friday, in order to not miss out on any continuation we like the entry at Monday’s open.
While we technically could find support at the bottom of the trading range that formed over the course of the last year, we feel that this pick is more of a momentum grab than a mean reversion play, so we decided to focus on only near term support in order to reduce risk. Up first we have the 100-day SMA at $0.211. Up next is a combination of the 200-day and 50-day SMAs at $0.205 and $0.201, respectively. Following these key metrics, we could be looking at a decent selloff, so we have decided to place our stop loss at $0.199/share.
As for the resistance side of the equation, because the price has blasted through all moving averages, we just have a handful of static levels that the price needs to break through to reach our price target. UP first is the May peak at $0.27. Following this is the 52-week high (made last October) at $0.30. We believe that the momentum we’re witnessing will thrust the price right through both of these ceilings and get to the July 2020 peak and our price target of $0.38/share.
With these risk parameters in place while using Friday’s close of $0.255 as the proxy entry price, this play is shaping up to have +49.02% upside while risking -21.96%. We anticipate this move occurring within the next six to seven months.
