I am trying to view this picture through a wider lense. It is not just ECU that is lagging. There is a real bifurcation in this market between the hot stocks and the weaklings, in terms of the junior PM producers. Those stocks that have been underperforming are lagging even more at the current time, while the 'hot stocks' that are market leaders continue to plow into new high ground.
Weaklings:
ECU, JAG, P, SGR, CRK, WDO, OSK
Market Leaders:
SLW, FR, GPR, NGD, IPT, EDR, CDE, AVL, PAA, FVI
SPM, AEM, and AGI seem to drift higher with a lack of conviction and do not fit in either category.
What I see is that the laggards are being ignored. Hot money is flowing into the sector and chasing the same names. The shorts have probably been squeezed out of the hot stocks but they are able to maintain their grip on the laggards, and even increase their exposure along the way. I am not trying to blame this on shorts overall. I think its more a momo play and the object in motion stays in motion.
My guess is that ECU will regain its appeal once the company has at least one deep drill turning. The producers are valued on cash flow and growth, and most of the laggards are companies that have disappointed in one or both categories. Put in some discovery upside for ECU and it may join the list of explorers that are rolling higher on speculative interest. For the gains to last ECU will have to prove that it can indeed generate strong operating results and I think the company is capable of doing so.
JMHO.
cheers!
mike
