COMPANY INVEST STOCK PROFILE

Today’s pick is a platinum miner in the metals and mining sector.  The company is Platinum Group Metals, Ltd (PLG). Platinum Group Metals Ltd. explores and develops mineral properties in Canada and South Africa, primarily platinum. It holds interests in the Western Bushveld Joint Venture, War Springs, and Tweespalk properties in South Africa; and the Agnew Lake and Lac Des Iles properties in Canada. Founded in 2000, PLG is headquartered in Vancouver, Canada.

FUNDAMENTAL TIDBITS

Trailing PE:  9.82 (Making PLG a value play)

Return on Equity: 14%

Debt: Zero!

Beta: 1.47 (Ideal for a trade)

TECHNICAL ANALYSIS FOR PLG

After an impressive bullish run in 2010, PLG has had a significant correction in early 2011.  This is good, because it is always better to find quality stocks on sale.  What is significant here about the daily candlestick price chart is PLG is in the middle of a bullish “W” formation. This pattern is also known as a double-bottom, and, when it occurs below a major moving average (200 day MA in this case), it is even more powerful, because there are short sellers sitting right above that level that will be forced to cover their shorts should PLG break the 200 day MA to the upside.  When this happens, the stock price will rocket upwards.  Another thing about “W” formations: they are more valid when the 2nd “V” (right side of “W”) is higher than the left side of the “W” (which is the case here.).  This is a very bullish pattern.  Additionally, PLG closed above the 200 day MA today.

The MACD indicator also just formed a higher low and got a bullish cross as well, which is another buy signal. And, as this happened, the histogram (blue bars) have moved above the zero line.  This confirms the MACD bullish cross.  The ADX is a favorite technical analysis indicator of mine.

Finally, the ADX momentum indicator got a bullish +DI cross today. This happens when the positive DI line (green), crosses up through the negative DI line (Red). Look for a confirming close over $2.20 to validate this buy signal.

Bottom Line:  Technical analysis for PLG is strong to the bullish side. Grab it here with a stop below the low point of the right side of the “W” (around $1.93). That way your loss will be minimal, but this pattern could easily produce a 20+% gain (challenging the $2.56 and $2.62 levels).

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