Medinah Minerals (MDMN)

[Hurricane_Rick]

Fundamentals do not play a role in technical analysis. It is strictly price, volume, support and resistance levels.

This is an oversimplified generalization that works with larger cap issues, indexes, ETFs, futures and whatnot that are widely held and traded, usually based on technicals with a bias based on more macro events or significant news events (or other fundamentals) that temporarily skew the technicals. However, the same cannot be said of the penny stock market which is composed of almost entirely news-based and news-reliant companies. In order to successfully read (and trade) a chart of a penny stock, a chartist HAS to know why a stock ran to or bounced off of particular points on the chart in order to properly understand the levels and degrees of resistance as well as the significance and probability of reaching those levels again.

I'm one of the few chartists that have illustrated, debated and extolled the uncommon reliability of MDMN's technicals, particularly on the weekly chart, despite it being a penny stock. However, I would NEVER discard the fundamentals of the underlying company when reviewing a chart of a penny stock. As Beth pointed out previously, the .19 level isn't just a technical resistance level...it is a fundamental/psychological resistance level that a LOT of shareholders know about without having any particular knowledge of how to read a chart. The .19 mark is the highest point (when MDMN had < 700 million shares outstanding) that the price went due to the publicized prospect of a completed joint venture with a toxic date of funding completion. Since that time, Medinah has come close to completing or funding a joint venture several times and in each case that bar of resistance has been lowered...due in part to the increased outstanding shares and shareholders lack of confidence in the company's ability to ever complete a joint venture. This is critical "actionable intelligence" that anyone investing or trading MDMN needs to know in order to be successful, or at the very least, to increase their odds of success.

When I look at this chart I see major resistance between 17c-19c regardless of what you think the reasons are as to why it did or did not punch through those areas does not matter. What matters is if, on the next leg up, it breaks through those resistance levels or not.

Aside from unanticipated mega-buying (i.e. whale-like buying prior to any news), there is no way the share price gets through the .19 level without a significant fundamental development. In my opinion as well as most other shareholders I would venture a guess, the share price won't break .19 without a completed joint venture. If you think it will do that solely based on technicals, then let's just say I wouldn't want to have you trading my portfolio for me.

In my experience the harder the resistance is to break through the greater the move to the upside once it is broken.

This is true. However, as I mentioned previously, unlike large cap issues, indexes, futures and whatnot, resistance with penny stocks is based more on fundamentals than technicals. MDMN would never even approach .19 unless it has the fundamental development of a joint venture in the offing. The market is not going to assign a $200 million market cap on MDMN unless it has a joint venture or some other significant fundamental development that warrants that valuation because there are a ton of investors (myself included) who would be selling hand over fist in the upper teens if MDMN got that high and there were no fundamental developments to support that price level.

If fundamentals were a true measure of stock prices then all we would all have to do is buy companies with low p/e or price-to-book or price-to-sales ratios and we would all be multimillionaires.

Fundamentals, particularly in penny stocks, comprise more than just p/e, revenues, etc. because most penny stocks, particularly junior exploration companies, don't even have earnings. Medinah's nearness or farness in finalizing the ADL joint venture has been the primary fundamental determinant of where the share price has traded really for over a decade. That's a fundamental development affecting the chart that no astute trader of MDMN should ever brush under the carpet if they wish to be successful.