A brief comment on the substantial trading volume at Geologix Explorations. Since my initial comments on Geologix on January 17th, the company’s shares are up nearly 40% (from C$0.22 to $0.31) and have traded a staggering 57.0 million shares in 2 weeks, including one particularly active day as the TSX’s most active stock at almost 30.0 million shares in one day.

My comments on Geologix came on the heels of an encouraging news release regarding high-grade expansion drill results, and although it’s not unusual for trading volume to increase after a positive news release, it’s clear that recent developments at the company’s Tepal project in Mexico, and the pending news flow expected in the coming months, have attracted the attention of new investors who recognize the disconnect between the value of the project and the company’s market cap. This renewed investor interest has allowed a large portion of  shares to move from weak hands into stronger longer-term holders who see the bigger potential for the project and the company in the coming months.

A series of pending news items, including drill results, geophysical results, a new resource estimation, and completion of a pre-feasibility study are all expected in the coming weeks and months.

Many readers inquired how such big volume can take place without a perceived bigger move in the share price. First off, a 50% increase in the share price in a little over two weeks is big (it’s just like a $21 stock going to $31). Second, this stock had lots of high volume (note A on chart) and one can assume those folks are using liquidity to get out from a losing position (which is better now than later). Third, there’s now high frequency trading on the TSX and computers trading for half-cents and pennies (like down in the U.S) is now a way of life north of the border. The bigger the activity the more of those traders are attracted to the stock and it feeds on itself. But all in all, this was very good for GIX and is setting up the shares to be able to move higher and faster if and when good news arrives.

Technically, the stock is breaking above key downtrend lines while approaching key moving averages. The second chart shows you a classic saucer bottom that I believe is the foundation for the share price to return to much loftier levels on the heels of lots of news flow in the coming weeks and months. It’s been my opinion that their projects are worth a multiple of what the total market cap has been for several months. I’m not alone on my bullish assessment.

A close above $37.50 should do the trick. It’s only a question of when, not if. Hi-Yo Silver!