The shares of Lepanto Consolidated Mining Company (both A and B) have been amazing in 2011 as they delivered gains of about 300%. Improving company prospects, buy-ins from a bigger company – Philex, and the jump in gold prices, have generated a lot of support and push for the company’s shares. However, the latest drop in commodity prices and the unwinding of huge funds could weigh in on LC and LCB.
Technically, the A shares of Lepanto (LC) have risen back to its former high at just above PHP 1.80. However, it appears that LC has been having a hard time moving above this resistance. A bearish divergence from the price action, volume, MACD, and RSI can also be seen. On the fundamental note, the 4% slip of gold yesterday (December 14, 2011) down to below 1,600.00 US dollar per ounce could likewise cause some selling pressure on this gold miner. Profit taking action by investors as the year comes to a close could also cause its support to shrink. In any case, if a correction happens, its price could fall back to PHP 1.60 or even to PHP 1.40 in the near term.