Avalon Rare Metals (NYSEMKT:AVL) issued a press release after the close today. The press release from Avalon can be found here. We are on the Avalon investor email list, and received the press release via email at 5:02 PM.
The press release went out after the close, but a look at the intra-day chart of Avalon shows heavy buying began starting at around 3:30. In the last half hour of regular trading, Avalon Rare Metals rallied over 6% after already being up 6.27% for the day following some positive articles being published prior to the open this morning.
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We cannot help but notice the dramatic increase in volume in those final thirty minutes. Volume is normally highest in the final hour of the trading day and also in the morning in the hour after the open. But 28% of Avalon's daily volume occurred in the final thirty minutes of the trading day and moved the stock over 6% at a time when markets should be the most liquid (as it is the time with the heaviest market volume).
We calculate that 2.697 million shares traded in Avalon in the last thirty minutes. The fifty day average volume for Avalon is 2.97 million, and the average daily volume since being listed on the AMEX is 4.12 million according to the data we have.
If we assume the 3:30 price for Avalon for all the shares traded in the final thirty minutes, $19.58 million traded in dollar volume, or over 2% of Avalon's market capitalization.
We are bullish on the rare earth space, but this reminded us that with the exception of Molycorp (MCP) and Lynas Corporation (OTCPK:LYSDY) many of the stocks trade primarily on the TSX Venture Exchange which is full of resource exploration companies with very small market capitalizations that can easily have their stock price moved.
Avalon should not be impacted by this since the company has a market capitalization of over $700 million.
We took a look at the Canadian trading of Avalon today and we saw a similar pop in volume. We note that the American trading far out paces the Canadian trading of Avalon now in terms of dollar volume (US volume more than double Canadian volume today), but we thought it would be interesting to share here also.
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We found such a sudden move in the last thirty minutes of trading very interesting even as rare earth bulls. Notice how the volume in Canada went from virtually nothing to over 30,000 shares per 3 minute period in the final thirty minutes of trading.
It looks to us like at the very least buyers in the last thirty minutes got really lucky with the timing of their buys if Avalon can follow through higher on the news in the press release.
Disclosure: I am long MCP, LYSCF.PK.
Additional disclosure: This article is for informational purposes only and should not be taken to indicate the author's views or future trading actions on the stocks mentioned. The facts in this newsletter are believed by the Strategist to be accurate, but the Strategist cannot guarantee that they are. Nothing in this newsletter should be taken as a solicitation to purchase or sell securities. These are Mr. Evensen’s opinions and he may be wrong. Principals, Editors, Writers, and Associates of The Strategist may have positions in securities mentioned in this newsletter. You should take this into consideration before acting on any advice given in this newsletter. Investing involves risks including loss of principal.