USGT Ready For Short Squeeze
Fellow Investors,
It was a relatively quiet day for USA Graphite (USGT) until about 2:30 PM when a massive short attack hit the shares, sending the price down to test major support levels.
Two million shares were sold at the offer, driving the share price lower. The price bottomed at $0.55 with about 12 minutes to go in the trading day and rallied back more than 25% off of the low to close the day at $0.69.
Volume set a new record with more than 8 million shares changing hands. 5.2 million shares were traded in the last 90 minutes of trading—nearly as much as during the entire day on January 7, the day the previous volume record was set.
No one can call it a good day for USGT investors but let's examine the short attack and seek how the shares held up in the face of such a huge amount of selling.
First, the low of the day was $0.55, as mentioned above. If you look at the daily chart and draw the wedge pattern that formed between December 11 and December 21, extending the trend line that forms the top of the wedge (connecting the highs of December 17 and December 20), that trend line is at $0.55 today. This is a major support line for USGT and that is exactly where the selling stopped. After that support was successfully tested, the share price rallied by 25% in just ten minutes. I'd say that was a pretty successful test of support, don't you?
Second, the 20-day simple moving average is at $0.7229 and rising. This is a major, medium-term support level. Now, as chartists, you know that support is not a specific point. It is an area. We can safely say that support at the rising 20-day simple moving average was successfully tested today.
So, looking at the daily chart, we have successfully tested two major support levels at a time of extremely heavy selling.
Think about it. The shorts had to find 2 million shares to borrow in order to carry out today's attack. Even so, USGT rallied off of major support.
Now, do you think they can find another 2 million shares to short? Can they find the 2 million shares tomorrow so they can capitalize on the downward momentum created by the short attack?
Not likely.
It is more likely that investors will want to take advantage of this opportunity to buy shares on the cheap. It seems that a rebound is the most likely outcome for tomorrow,
Now look at the intraday (1-minute chart). Just eyeballing it, the chart indicates that the bulk of the selling this afternoon took place at $0.70 or below.
That means that, even at today's close of $0.69, the shorts are breaking even on their trade—at best. And they could be losing money.
If investors start to buy USGT at these bargain basement prices, the shorts will have to buy back their shares.
Remember, the only way to take a profit on a short sale is to buy back the shares. These guys are already losing money on their short. A sharp rebound tomorrow will make them really feel the pain.
The chart is already telling us that USGT has successfully tested two major support levels. Now here is a little bit of news that the shorts probably didn't see before they sold their shares today.
According to Rice University, in an article published in the scientific journal Physical Chemistry Chemical Physics, graphene oxide, made from the natural flake graphite found on USGT's graphite properties "amazed" researchers who used it to remove radioactive contamination from water.
Because of graphene oxide's large surface area, radioactive materials dissolved in water quickly bind to the graphene oxide and become solids that can be easily removed from the water with screens or filters. The graphene oxide can then be burned off; leaving a solid cake of radioactive material that can be safely disposed of or recycled.
This means that graphene oxide can be used to clean up contaminated rivers around Japan's Fukushima nuclear plant, which was damaged by an earthquake in 2011.
Graphene oxide can also be used to safely remove contaminants from rare earth mining and water used in hydraulic fracturing (fracking), which is widely used to produce shale oil and shale gas here in the United States.
Just this one use for graphene oxide, made from natural flake graphite, could be worth millions.
Take advantage of this opportunity to buy USGT on the cheap. The charts are calling for a rebound. The news about graphene oxide is very positive. If USGT resumes its path toward $1.00, $2.00 or higher in a rebound tomorrow, the shorts are going to have to buy back their shares to cut their losses. Make their pain your gain. Don't hesitate. Don't miss out!
Happy Trading!
Disclaimer: http://upurs.us/image/45013.jpeg
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