Mega Buy
Oh no! It's the end of the world! Big News was that TSX loses 623 points in just a couple days.
It's funny that right before this everything was so positive with Gold hitting new highs and newspaper articles talking about fund manager's "herd mentality".
So what does this all mean?
Well we are at a very volatile time in our markets with large moves up and down with a general flat trend. I myself am holding put in my positions and establishing some test postions in some beaten up stocks.
What stocks?
Well the first I want to talk about is Mega Uranium (mga.to).
If you look Mega's chart there is nothing bright about it. The stock is off of its highs in the 9 dollar range to its current price below $3!!!
So yes you can say it has taken a beating!
But the thing that I find very positive about it is that Sheldon Inwentash, its CEO has been buying up the stock hand over first the last month or so in the $3 level.
This is a man who has made money time after time with stock after stock. In other words, this is a man who has a very good reputation and who's actions we should watch closely.
So with Mega, I am thinking you should establish a small test position. For example, if you want to own $10,000 worth of it in the end, you should buy about $2,000 right now.
Then we wait and test our position. I won't lie to you. I have no idea when this stock will bottom out, if ever.
But by looking at past movements and through my research, I think this is a very strong company and I really think it will go higher in the future. I just don't know exactly when.
If the stock starts to climb like I think it will, then we should start pyramiding our position at approximately the $4 level. And then we should keep averaging up as it continues to go up. If it does not or it stalls for a bit, then we stay put.
If it starts to drop past a predetermined stop loss (i.e. 20%, set whatever works for you) then we should get out and wait again.
So there you have my theory on Mega. I think it is one of the best bets in the Uranium Sector and I think establishing a test position in this beaten up stock has a good chance of paying off in the future!
I will keep you posted on the stock of course and provide more research in the coming weeks.