Revett Minerals is Knocking on the Door (RVM)

If you've never heard of Revett Minerals Inc. (NYSEMKT:RVM) before right now, don't worry about it - you're not alone. The $25 million silver and copper miner doesn't have enough size to merit much media attention, and to make things more difficult, silver and miner has spent the better part of 2013 being out of favor. Yet, things are slowing changing for RVM and its shareholders.... for the better. Though a little more work needs to be done, this stock's knocking on the door of a monster breakout.

Just to set the tone, RVM was - up until last quarter - an active producer. In Q4 of last year, the company generated $7.2 million worth of metals, and $19.3 million in Q3 of 2012. Since then, however, the shut-down of a key mine (Troy) limited Revett Minerals' top line to $216K in Q1, and nil in Q2.

A shutdown is an alarming turn of events for shareholders to be sure; that mine's original access route became impassable, and the company was forced to pull out, and then re-approach the Troy mine from a different angle. The new entry should work, but it takes time and money, which has meant trouble for the stock; RVM shares have fallen from $4.00 in the fall of last year to $0.73 now.

So what makes it worth bringing Revett Minerals up now? A light at the end of the tunnel, which is (more importantly) being reflected on a chart of RVM.

Though it's not done anything riveting after finally hitting bottom in June, shares have quietly and inconspicuously wiggled their way back above the 20-day moving average line (blue). Better still, Revett Minerals is working on clearing its 50-day moving average line. They're small step to be sure, but all large moves start small. The fact that traders aren't balking as the 50-day line is being tested speaks volumes.

That being said, one final milestone remains - the ceiling at $0.74. That's where RVM shares peaked in mid-July, again in late July, and where it peaked today. Clearly there's a mental hurdle there, but if the stock can close above that mark, this long-brewing breakout will finally take hold. The safe thing to do is wait for the final clue to fall into place, but as good as things look already, it may be worth taking a pre-emptive plunge and not waiting for that convincing close above $0.74.

If you'd like to get more trading ideas and insights like this, be sure to become a subscriber to the daily SmallCap Network e-newsletter. You'll get stock picks, market calls, and more. It's free!