Fellow Investors,
In keeping with its well-established trading pattern, USA Graphite (USGT) rallied back from morning weakness to finish the day unchanged. Today's price action formed another hammer on the daily chart, once again indicating a reversal from the recent down trend is imminent.
News was out after the closing bell as the company announced that it has signed a letter of intent to acquire the lease to the Ruby Mountain graphite property, near its other core graphite projects in Nevada. This is very positive news and should be reflected in a positive open on Tuesday.
After the close, USA Graphite management issued a press release stating that the company has signed a letter of intent to acquire the rights to the 787 acre Ruby Mountain graphite property, about 25 miles southeast of Elko, Nevada. Ruby Mountain has some very positive geology that was in excess of management expectations, according to the press release.
We can see that the company is progressing with its plan to acquire graphite properties that are close to its existing leases in order to maximize the efficiency of its team of geologists and its drilling equipment. This is very important in an early stage company like USGT because it reduces the company's cash burn while it is still exploring and not yet getting revenue from mining operations.
The last time management announced a letter of intent to acquire a graphite property was for the Gordon Creek property. The company concluded the deal to acquire Gordon Creek just days after the letter of intent was announced. We can't be sure that USGT will be so quick this time but notice of an acquisition could come sooner rather than later.
Don't let the recent down trend cause you to hesitate. The bears have shot their wad and they are all losing money. With today's positive announcement and the likelihood that it will be followed up with the announcement of an actual acquisition sooner rather than later, the share price could rally back through last week's highs—especially when the shorts have to cut their losses by buying back their shares. You would want to miss out on that, would you?
The USGT daily chart has formed two consecutive hammers and closed unchanged at $0.69 two days in a row. While it is unusual to see two consecutive hammers, that is not notable in and of itself. However, the two hammers clearly define strong support around the $0.69 level. It is going to be very difficult for the bears to drive the price lower under these circumstances.
So you have a great chart with clearly defined support and positive news out today with the promise of more positive news in the near future when the acquisition of Ruby Mountain is announced. What are you waiting for? The time to take action is now!
Happy Trading!
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