Fronteer Developments Group: 09 May 2010 Update

On 1st May 2010 we decided to dispose of our position in Fronteer Developments Group (FRG) for an average price of $6.20 per share, taking the cash to sidelines. At the time we were of the opinion that the stock price was running a little ahead of itself and the divergence between the stock price and the 200dma looked a little too stretched for us and that a breather could soon follow.

As we can see from the above chart there appears to be a double top forming at the same time as the stock was getting ahead of itself. So our disposal of stock at $6.20 looks to be a reasonable call as the stock price has retreated a little to close on Friday at $5.36, despite rising gold prices. The stock price may stabilize at this point as it is perched on the its 50dma, however, it could go all the way and take tea with its 200dma. For now we will monitor FRG's progress and see just where it settles before re-evaluating it as a possible acquisition.

We do like this stock very much and hopefully we will be able to re-purchase it at a slightly cheaper price in the not too distant future.

Have a truly sparkling day.

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Comments

[Julian]

Team,

Is Animas Resources (ANI) on your radar as a 'buy'? I'd appreciate your comments.

Julian, Brighton, England

[John Ell]

Thanks, I needed a push to get me out of FRG.
John

[Gold Prices]

Julian,

Animas Resources, afraid that we cannot help you with this one, we know that they have a couple of projects in Navada, a market cap of around $15 million, maybe some of our readers are fans and can tell us why it is a 'buy' etc.

[Gold Prices]

John,

I think it was us that needed the shake, still rate them, but they appeared to be running a little ahead themselves, so we will see.

What are you now going to buy with the cash?

[John Ell]

Hi, I did reply sooner but the mail was returned since I inadvertantly did not use the proper response format.
Good question, and for now I am inclined to go conservative.

Will be looking at increasing our holdings in AEP, GG, PAAS, and Rare Earth
Element - RRLMF.

Keeping my fingers crossed as things look increasingly unstable,
unpredictable, precarious - all those things, which makes your job
monumental. Best of luck to all of us.

Regards,
John

[Gold Prices]

John,

Thanks for the update, interesting stuff. We just havnt got the time to do a thorough job in the Rare Earth sector so we will have to remain as mere observers for now. If you can spare the odd comment you will keep us in the loop and it will also be of use to the rest of the team.

Good luck with that one.