As I have stated before, I was rather late getting involved in small or penny stocks, especially those trading on AIM. However, even though the corporate governance area of this part of the stock market still leaves a lot to be desired, presumably now that you can place AIM stocks in your ISA, it may very well be that an element of credibility has crept in.
One of the more intriguing plays on AIM has been that of Iofina (IOF). Indeed, the price action here has been as weak as the health of the former CEO whose departure earlier in the summer, led to a quite dramatic fall in the share price of the iodine extractor.
Perhaps it could be argued that while the decline was understandable, the business model of the group remains very much intact and therefore this weakness could be a buying opportunity?
Nevertheless, what can be seen from the daily chart is that it is still by no means a “done deal” that the shares are going to recover on a sustained basis. The ideal scenario here would be that we are treated to a weekly close back above the rising 200-day moving average currently at £1.50, either this week or next week. Such a scenario combined with the higher August support versus the June floor below £1.20, could mean that for September we see a decent retest of July resistance just above 200p. Nevertheless, this still appears to be a very fluid situation.
Proteome Sciences (PRM) was one of the brighter small cap hopes for the first part of 2013; but as can be seen from the daily chart, since the end of June, things have unwound rather painfully, with this month’s equity issue dampening the price action still further.
It would appear that we are in a classic “bear flag/mid-move” consolidation prior to a fresh leg to the downside. Such a negative scenario would only be delayed by a weekly close back above the flag at 45p, something which currently appears to be difficult to envisage.
Indeed, as little as an end of day close back below July intraday support at 37p could trigger a decline towards 20p on a measured move basis, breaking the lows of the autumn around the 30p level.
At this stage the earliest one would suggest bargain-hunters can think of going long is if the March RSI resistance line currently at 50 versus the level of the oscillator currently at 40, was broken in a convincing way.
Finally, it may be worth keeping an eye on perennial speculative favourite EMED Mining (EMED) where the stock has apparently been bumping along the bottom for the best part of three months. This process is explained by the way that a merry dance is being served either side of former autumn 2011 support just under 6p, as well as at the floor of a falling two-year price channel currently at 5.5p.
It is encouraging that the shares have managed to reclaim the 50-day moving average at 5.88p, as well as the neutral RSI 50 level to stand at 53 on the oscillator scale.
However, it may be wise to wait on a weekly close above RSI 50 and 6p before deciding that a basis finally been built and that they return towards the 200-day moving average level at 9p plus may be seen over the next couple of months.