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Discovery Metals (DML)

(Click here for DML fundamental research and company information)

Technical View

The last review of DML was at the end of August.

At the time, a positive view was put forward with the comment 'the stock has tracked sideways over the course of the year and has held above its rising 200DMA. This action appears to be a normal consolidation phase within an ongoing bull market..... . it is difficult to determine the timing of the next impulsive advance, and range trading between approximately $1.20 and $1.52 could extend for the next few months; but the stock continues to present a robust profile and the trend of outperformance that commenced in early 2009 can continue'.

Well, price has finally broken topside, with a sharp rise on Monday. This is on top of an 8% gain last week.

Volume indicators have been positive on the recent upmove, and depth has been impressive, with Buyers outnumbering Sellers by a solid margin.

Although chasing the stock at current levels carries some risk, the breakout is impressive, and if not reversed over the next few days, suggests that the next stage of the 2008 bull market is unfolding.

DML is rated as a Speculative Buy, with an initial target of $1.90–$2.00.

The stop-loss level is $1.31.

(click image to enlarge)