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How Investors Return after a Metals Bear Market

Posted by nexvucapital on October 25, 2013

The return of investors to a bearish sector is a top down phenomena. In the first wave, investment capital returns to the largest most liquid operating companies and then it moves down toward the smaller more growth-oriented operating companies. Specifically, in the resource sector we then see another couple of stages where capital seeking higher risk/reward moves into the non-operating advanced asset companies and the final move is into the grass-roots exploration companies.

On March 27th of this year, we highlighted Lumina Copper (TSXV.LCC) as one of these “non-operating advanced asset companies”. The share price was just over $8 at the time and during the bottoming of the resource market this spring and summer Lumina reached a low of just under $4. Today we see renewed interest from investors as the share price is currently north of $6.00. We have added the projected lines of support/resistance as well as the downtrend channel. The term “Smart Money” should always be defined as those who buy from and sell to “Dumb Money”.

LCC October 25 2013

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