Silver Falcon Mining Inc. (fka SFMI)

[Hurricane_Rick]

For the TA folks: I'm going out on a little bit of a limb here and calling a TA reversal should be at hand within the next couple of trading sessions...possibly as early as tomorrow. Here is the reason why:

The daily chart has set itself up for what is sometimes called a "bollie bounce" and what I like to call a "confirming bollie bounce". The law of averages (and standard deviations) reflected through the bollinger bands dictates that the share price in any security cannot sustain its price outside of the bollinger bands. It often does for a brief amount of time, but the share price will ALWAYS return to the middle bollinger band (the mean of the standard deviation)...even if for a fleeting moment.

If you look at the chart I annotated below, today the share price closed at .122 which is outside of the lower bollinger band which is currently .124. Not a big deal as this can and does happen many times in down trends. However, if you look at the Stochastics study below the chart, you will see that the Full Stochastics line closed below 20. It is actually well below 20. When STO < 20, it is considered oversold. A signal for a reversal is when the STO does a fast-over-slow crossover (green over red) and then rises back above 20. This has not happened yet, but it has been set up to...much like the field goal unit coming out onto the field about to kick. Now, when we consider the backdrop of an impending reversal due to the horizontally based A/D line showing a wide divergence from the declining share price (as I explained in my attached post), there is enough confidence shown by the indicators that we are at or near a bottom and a reversal should be in play.

I have annotated each time this condition has occurred previously on SFMI since August and in each time the share price ran to the upper bollie. Usually we can expect the share price to run to the middle bollie, but if the reversal is true and not just a bounce, the share price should run to the upper bollie and hopefully continue from there like it did in September.

So, if tomorrow shows a green candle and Stochastics shows a crossover, then that would be a buy signal for an aggressive chart trader playing the bollie bounce condition. A more patient trader might wait for the STO to cross back above 20 to avoid potential headfakes. The reversal should run back at least to the middle bollie (20MA) which is currently .143. If it is a true reversal, then we'd look for it to at least trade to the upper bollie which is currently .161. Note that those figures will change as the price changes each day.

Keep in mind, nothing is guaranteed with TA so I wouldn't go buying on my analysis; however, we are working with probabilities. While I haven't specifically quantified this condition in my trading experience, I estimate the success in this kind of reversal occurs about 75% of the time. If the downtrend is really strong, it is subject to headfakes. In SFMI's case on the daily chart it has occurred successfully 3 out of 4 times as well.

If this does play out as I've described, I will be a buyer. The divergent A/D line to share price should give a buyer a bit more support and confidence in making this TA play.