WSEResearch update on EOW action:
Last week, we saw an unexpected selloff of Willow Creek (WLOCD) which caught all traders off guard. After seeing nothing but support for the shares at 61 cents and looking poised for a breakout, the support level of 61 cents was broken and short-sellers drove the share-price down significantly to a low of 25 cents, and then the equity rebounded to just below 30 cents at the end of the session.
Many investors are frustrated by this event as it is completely opposite to the trend we have been accustomed to for the last 3 months. The questions we are going to answer are why it happened and what is in store for Willow Creek.
The Why?
After doing some studies over the weekend it is clear that there was a big short position on Willow Creek (WLOCD). If you follow the chart post-split you will see that there was a lot of selling of WLOCD at 61 and 62 cents. Our opinion is there was in fact too much selling for it to have been realistic. We believe that short-sellers artificially drove down the price through the support level of 61 cents and when it broke that level continued to drive the price down. The selling was much too aggressive to have been retail considering that most investors (including us) believed that after the company began to drill, the share-price would increase to above 90 cents.
What is ‘next’ for Willow Creek?
Well, the good news for investors is that Willow Creek (WLOCD) should see some recovery in the coming days and with some good corporate developments they could see a return to their previous 52-week highs. The goal for investors now is to find the most profitable exit strategy. Near-term investors may be forced to take loses on WLOCD as the biggest resistance area will now come between 50 to 61 cents as this is the area where the shorters were the most aggressive. For shares to return to previous highs it will more than likely take time as the news that will be the catalyst to move through that area is drilling on their Dolly Varden or Hercules properties.
One strategy that investors may be tempted to use is "averaging down" this could be a very effective strategy; however, this is a strategy that we believe should only be followed by professional traders.
We know that Willow Creek (WLOCD) moves quickly on strong developments so the strategy we will be implementing is looking to capitalize on positive developments to lock in profits when we can.
In the future, we will be certain to lock in profits earlier and make sure that we are not in this position again.
We will be sure to update our members on positive developments in the coming weeks.
Best Regards,
Wall Street Equity Research Trade Desk
www.wallstreetequityresearch.com
AI
