FRG is now showing a decent paper profit so the question that we must consider is whether to take a profit or not?

If we look at our original article about Fronteer you can see that we were buyers at $4.70 on the 14th July 2006.

FRG closed on Friday at $6.50, this rise in the stock price equates to a paper profit of 38.09%

The chart is clearly giving us some overbought signals as you can see.

However there are a myriad of other influences to take into consideration including the upcoming US elections that in our opinion have played a part in keeping gold in check. This in turn has an effect on FRG, as it is both a gold and a uranium play. These elections will be over in less then 2 weeks time so it may be wise to stay with this uranium stock.

Back to the chart: it looks to us that we could take a short term profit at this point and buy back in when the price corrects to around the $5.50 level. We know that this is only a difference of one dollar and question the wisdom in chasing such a move! The stock price does appear to have support at its own 50DMA so that is where we think this small correction will end.

Thoughts: We could sell half of our holdings in FRG on Monday at $6.50 and hold onto the other 50% just in case we have timed this move incorrectly. We are of the firm belief that this stock has a long way to go and FRG is in our humble opinion a serious takeover target, so coming out is fraught with risk. However the indicators point to a correction and on this occasion we are considering how to play it.

So there we are, the stage is set for a good ding-dong in this office on Monday morning.

If you have a view on this situation then please feel free to fire it in to us.

As always don’t go too mad either way with any one stock.

Sleep tight and relax this just may give you a chuckle.

28 October 2006