CMKM Diamonds Inc. (fka CMKX)

[Ignutz]

Important note about price...

…. with reference to Shore Gold (v.SGF)

For those with long memories, I'd like to take you back to April 1993 when Aber - (TSX- ABZ, NASDAQ-ABER) was trading firmly in the $2.25 - $2.50 range while investors waited for the commencement of the first drill program on Diavik after the initial confirmation that diamondiferous kimberlite had been found. Aber's trading history in that period was remarkably similar to that which Shore is now experiencing and worthy of note. On April 15th of 1993 the stock closed at $2.55 on relatively low volume. On the 16th however volume increased (on no impending news) with the first snippets of institutional interest, to close for the fist time over $3.00 at $3.10 trading over 1 million shares. The following close was at $3.90, with the stock reaching a new plateau at $4.75 - $5.00 by May 6th.
Throughout this period there was no news, only the promise of good things to come combined with an expectant market with newfound institutional interest.
Those here who have watched the junior markets for many years are likely familiar with this phenomenon, and those who are not should take note of the simple reason why this sometimes happens....namely the three dollar margin limit. Once a stock crests three bucks it's purchase can be completed using 50% margin and thus larger positions can be taken by those with a significant appetite. Word is that the recent financing was oversubscribed by something like double, thus indicating a huge appetite for Shore at these levels. Research Capital's heavy institutional purchases at the $2.70 level today bear this out well. Once the $3.00 threshold is cleared, the stage will be set for an increase in volume and price due to the levering effect of the 50% margin limit. Those who want to hold shore at these prices can in fact get a position twice the size (albeit an inherently more risky one) for the same initial cash outlay.
This happens a lot when stocks are in play and Shores results, combined with the obvious interest of the international diamond community set the stage for some interesting days ahead. LOM knows this and most professional traders understand that the distance from $3.00 to $6.00 on a stock with promise can be covered with alarming rapidity.
Cheers per Werner_k
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