The Memorial Day U.S. holiday is making for a quiet day in general on the Canadian markets…the CDNX is up 6 points to 1510 as of 9 am Pacific time while the TSX is ahead 49 points to 11,720…Gold is stronger by $3 to $1,217…Gold Bullion Development (GBB, TSX-V) is active this morning, trading at 43 cents on nearly 600,000 shares so far…BMR is preparing for its visit this week to GBB’s Granada Gold Property near Rouyn-Noranda, Quebec…our first full day at Granada will be Wednesday and we are extending our visit through Saturday…Seafield Resources (SFF, TSX-V) is unchanged this morning at 18 cents…the company announced a proposed private placement Friday to raise up to $2.5 million at 17.5 cents with the financing expected to close by the end of this week…Seafield has made a “double bottom” on the charts and as our report earlier today outlined, technical and fundamental factors strongly suggest Seafield could make a significant move to the upside in the month ahead…Richfield Ventures (RVC, TSX-V) is heavily oversold and in a very attractive buying area around its rising 200-day moving average…Richfield is off 6 cents to $1.26…
May 31, 2010
BullMarketRun first uncovered Seafield Resources (SFF, TSX-V) when it was languishing at 6 cents last summer. It rocketed to 35.5 cents in late February before a sharp and unexpected pullback all the way down to 16 cents early this month. The stock closed Friday, May 28, at 18 cents and there is now overwhelming evidence that another major reversal is close at hand. BMR’s technical analyst reviews a very interesting Seafield chart below but there are also important fundamental reasons why we believe Seafield will be a very strong performer in the month of June.
Two events tell us that some very significant new “players” are now involved with Seafield: 1) The company’s record 10 million share day May 13; and (2) Seafield’s proposed $2.5 million private placement announced Friday.
Seafield didn’t have to do a financing right now, especially at current levels, but President and CEO Tony Roodenburg elected to do so we suspect because it made strategic sense. In otherwords, those participating in the financing must have some clout behind them and the ability to help the company in various ways.
Seafield will be ramping up its Colombian exploration efforts very soon with drilling to commence shortly at Dos Quebradas and/or Miraflores. Those are two excellent targets.
And in a positive development yesterday, Juan Manuel Santos – Colombia’s former defence minister and the market’s favored candidate – positioned himself for victory in what will be a runoff presidential election June 20.
Seafield has struggled the last three months but the good news is, the beaten-down share price has given us another great opportunity here – the stock is extremely attractive once again from a risk-reward ratio.
Seafield’s current chart confirms all of the above as explained by John below:
John: On Friday Seafield announced it “intends to complete a private placement offering of up to 14,285,714 units at a price of 17.5 cents per unit, for gross proceeds of up to $2.5 million. Each unit will consist of one common share of the company and one common share purchase warrant with each warrant entitling the holder thereof to purchase a common share at an exercise price of 25 cents for a period of two years following the closing of the offering. The offering is expected to close on June 4, 2010.”
Seafield opened at 17.5 cents Friday, traded as low as 17 cents and closed at the high of the day at 18 cents on 280,000 shares. The above announcement, together with the technical analysis of the chart, indicates that SFF is creating a base for a significant move to the upside in the near future.
Looking at the chart we see that starting in January of this year Seafield started to create a bearish reversal “head and shoulders” chart pattern. This is noted on the chart as left shoulder (LS) and right shoulder (RS). The lows between the LS and Head, and between the Head RS, are joined and the line (neckline) is extended as shown.
The distance in cents is measured from the top of the head to the neckline (10.5 cents) and then this same distance is measured down from the point at which the dropping price crosses down through the neckline (25.5 cents - 10.5 cents = 15 cents). This is a vertical green line. The target line is a short horizontal blue line. Thus the stock was expected to drop to about 15 cents. The low for the stock was 16 cents, reached on May 6, where it has found very strong support.
Between May 3 and May 28 Seafield formed a double bottom, a bullish reversal pattern (blue circles). The 10 million share day May 13 – by far the most number of Seafield shares ever traded in a single day – was highly significant.
Friday’s candle was a hammer (bullish reversal).
Looking at the indicators:
The ADX trend indicator shows the ADX (black line) trend strength is weak, thus the positions of the +DI and the -DI are inconsequential.
The Slow Stochastics has the %K (black line) about to cross up over the %D (red line) – very bullish.
I have not introduced the MACD indicator before so here is a short description for interested readers:
The MACD is an acronym for Moving Average Convergence-Divergence. MACD uses two exponential moving averages (12 period and 26 period). The difference between these two moving averages is the MACD line (purple). The trigger or signal line (black) is a 9 period exponential average of the MACD line (usually shown as 12/26/9). The common usage for this indicator is to recognize the crossovers of the MACD line and the signal line for buy and sell points.
In this case I’m looking at a signal called a “hook”. A hook occurs when the signal line attempts to penetrate the MACD line and then at the last moment reverses. See the two green circles. The result is a reversal in the price. The chart shows that this condition presently exists. This is bullish.
The market closed Friday with at least 500,000 shares on the bid at 17.5 cents – this is also bullish.
Outlook: A significant reversal situation has developed with Seafield Resources which can be expected to make a strong move to the upside as early as next month.
May 30, 2010
The BMR Portfolio
Gold Bullion Development (GBB, TSX-V)
Gold Bullion has been a market leader over the past 2 months and can therefore be expected to reach new highs soon with June expected to be a much better month for the CDNX…despite the 10% drop in the Index during the month of May, with one more trading session remaining this month, Gold Bullion is actually up 2 cents over where it was at the end of April…GBB closed at 42 cents Friday, a 3-cent increase over the previous week…technically, GBB is showing all the signs of a stock that wants to go much higher…it encountered tremendous support in the mid-30′s during the May meltdown and has been forming a nice base in the upper 30′s and low 40′s…all of GBB’s moving averages are in bullish alignment…from a technical perspective, this is a perfect textbook example of a situation to be invested in…fundamentally, of course, Gold Bullion is aggressively drilling its Granada Gold Property which has become one of the most exciting exploration plays in the country with the potential of rivaling Osisko in terms of total ounces in the ground…for these reasons BMR is heading back to Rouyn-Noranda this coming week to report in more detail on Gold Bullion directly from the LONG Bars Zone…our first visit to Granada was in mid-March…
Richfield Ventures (RVC, TSX-V)
Richfield has had a difficult month of May but a rebound in its share price appears imminent…from an all-time high of $2.25 last month, Richfield dropped as low as $1.22 May 21 when the CDNX bottomed out at 1393…technically, the stock is clearly in an attractive buy zone right now as it hugs its rising 200-day moving average…Richfield closed Friday at $1.32, a 2-cent drop for the week…the company is developing a potentially world class bulk tonnage deposit at its Blackwater Gold Project in central British Columbia and there’s every reason to believe Richfield will continue to produce impressive results…
Seafield Resources (SFF, TSX-V)
We suspected something was “up” with Seafield when it traded 10 million shares in a single day May 13…we got confirmation of that Friday when the company announced a proposed private placement to raise as much as $2.5 million at 17.5 cents…Seafield didn’t really have to do a financing so what’s going on here?…the evidence suggests that some powerful new “players” have gotten involved with Seafield which has to be viewed as a positive development…we’re not pleased with further dilution at 17.5 cents which will give the company 92 million outstanding shares and a lot more warrants as well…however, President and CEO Tony Roodenburg is a strategic thinker and he would not be doing this private placement simply to add more money to Seafield’s treasury…this has to be a strategic deal, positioning some “movers and shakers”…the quick closing of this PP (June 4) is encouraging and supports our thesis…Seafield closed Friday at 18 cents, unchanged on the week and with a huge bid at 17.5…this is a time to be accumulating Seafield, not dumping it out of frustration…
Kent Exploration (KEX, TSX-V)
Kent was halted on Wednesday as it came out with an impressive drill result from the Bunarra Zone at its Gnaweeda Gold Project in Western Australia…one of three holes drilled at Bunarra earlier this spring returned 18 metres grading 11.09 g/t Au…the shallowness of the hole (115 to 133 metres) was also significant…the stock gapped up to 21 cents Thursday morning but pulled back and closed the week at 17.5 cents, a 1-cent increase from the previous Friday…at BMR, we have very strong faith in Kent’s projects – they have what amounts to three “flagship” properties – but unfortunately the company is inadequately financed and must address this issue immediately…President and CEO Graeme O’Neill did an excellent job preventing dilution with Kent at a nickel or 10 cents but continually funding this company through the exercise of warrants and stock options is no longer the answer…investors are understandably frustrated when they see O’Neill selling large chunks of stock into the market as he did Thursday in order to exercise warrants and put some needed dollars into the company’s bank account…the inability of Kent so far to close the Archean Star spin-off is also a serious concern…this company has the goods to attract a significant financing and that’s what it requires in our view in order to ultimately increase shareholder value…
North Arrow Minerals (NAR, TSX)
BMR had a very interesting discussion with Dr. Chris Jennings this week and we posted that interview Saturday…Jennings is one of the world’s foremost authorities on diamond exploration and of course co-founded the Diavik deposit with North Arrow President and CEO Gren Thomas in the early 1990′s…NAR has worked out a joint venture agreement with Jennings on its 100,000 acres at Lac de Gras where Jennings has identified 70 high priority kimberlite targets through proprietary technology that uses airborne data…Jennings ranks the discovery chances at Lac de Gras as very high…North Arrow will commence drilling there by August…in the meantime, drilling continues at the company’s highly prospective Beaverdam Lithium Project in North Carolina…North Arrow closed the week at its rising 100-day moving average of 19 cents…the company is well funded and the risk-reward ratio at current levels is extremely attractive for investors with a minimum 3-month time horizon on this stock…
Sidon International (SD, TSX-V)
The waiting game continues with Sidon as its recently announced $750,000 private placement has yet to officially close with the Exchange…Sidon has a letter of intent to acquire an option to purchase an 80% interest in the Morogoro East Gold Property in eastern Tanzania, a highly prospective area for gold exploration…we continue to expect big things out of Sidon and we anticipate they’ll have everything cleared with the Exchange sometime in June…the stock closed the week at a nickel where it’s strongly supported by rising 100 and 200-day moving averages…
Colombian Mines (CMJ, TSX-V)
Volume has really dried up in CMJ recently which can be viewed positively as investors aren’t too eager to sell at current levels…the stock was down 4 cents on the week to 97 cents…an exploration update on Yarumalito is probably not far off…Colombian Mines has a strong treasury and a highly attractive portfolio of exploration projects in Colombia, so we’re content to stick with CMJ for the long haul…we first highlighted this stock at 60 cents last fall…
Greencastle Resources (VGN, TSX-V)
Greencastle has found a “comfort” zone between 11.5 and 13.5 cents, a range it has traded in since May 4…the stock is clearly a terrific buy at current levels as the company is sitting on approximately $5 million in cash and has gold assets in Nevada that the market isn’t putting any value on at the moment…however, there is a potential “opportunity cost” with Greencastle as it’s impossible to say when the company will announce something that will allow this stock to wake up…Greencastle should be acquired right now only by those investors who are prepared to sit on this stock through the balance of the year…
May 29, 2010
CDNX and Gold
The CDNX enjoyed a strong week as it gained 50 points or 3.4% to climb back over 1500 with a Friday close of 1503. What’s particularly interesting and significant is that the CDNX has outperformed all markets over the past five trading days since hitting a yearly low of 1393 May 21. The powerful intra-day reversal May 21 signaled, in our view, the end of a vicious 15 session correction that wiped 295 points or 17.5 off the value of the Venture. In historical terms, this was a fairly typical “major” correction within a CDNX bull market and almost identical in both magnitude and duration to the pullback in early January, 2008. Following that correction the CDNX jumped 20% within six weeks and we wouldn’t be surprised to see history repeat itself yet again – June could turn out to be a spectacular month for the CDNX. BMR’s technical analyst surprised a few investors the other day with his call for a new high on the Venture this summer of 1770 and we believe he’ll be proven correct (see John’s full chart analysis posted Friday, May 28).
Some will argue that what we’re witnessing now is simply a rally that doesn’t have much further to go and should be sold into before the markets totally collapse. We couldn’t disagree more and for the following reasons:
1. The nature of the May 21 reversal mirrored the reversals we’ve seen at the bottom of other major CDNX corrections over the past decade;
2. The CDNX reversed ahead of the major markets and is up 7.9% since May 21 vs. just 2% for the Dow, 4% for the Nasdaq, 4.4% for the TSX, and 6% for the TSX Gold Index. When you see the world’s most speculative junior resource market perform like that, the major markets aren’t about to collapse – in fact, just the opposite. The Venture is an extremely reliable leading indicator. It’s the first market to head south when danger is on the horizon and it moves just as quickly in the other direction when the outlook for the overall markets is positive;
3. Market sentiment, as guaged by the CBOE put/call ratio, reached extremely bearish readings a week ago, typical of a market bottom.
Gold continues to look strong. Its drop to $1,170 recently merely took it down to its rising 30-day moving average and it quickly recovered to get back over $1,200. Gold remains in a powerful uptrend channel as does the TSX Gold Index. In addition, the CDNX is telling us the outlook for Gold is positive.
Dr. Chris Jennings is one of the world’s foremost authorities on diamond exploration. He is truly a legend in the industry and of course teamed up with Gren Thomas to discover the Diavik diamond deposit, one of the richest in the world, in the Northwest Territories in the early 1990′s.
Dr. Jennings was in Vancouver this past week and we had the pleasure and the honor to be able to interview him regarding his proprietary technology for the discovery of kimberlite pipes and his involvement with North Arrow Minerals (NAR, TSX-V).
Keep in mind this is an individual who was been everywhere diamonds have been discovered in the world. “There is no more prospective ground (in the world) than North Arrow’s property which is immediately contiguous and on the same dike structure as Diavik and Ekati,” Jennings boldly stated. Then he added, “I’m excited.”
Through his proprietary technology Jennings has identified no less than 70 high priority kimberlite targets on North Arrow’s property where only 20 holes have ever been drilled over an area spanning 100,000 acres. Diavik trends right through the middle of the property and Jennings is convinced that not only are they about to discover some pipes on North Arrow’s property, but economic ones as well. The ratio of kimberlite pipes to economic pipes at Lac de Gras is the best in the world.
Folks, we already have one stock in the BMR Portfolio that has made a very significant discovery (Gold Bullion Development). We predicted that would happen back in December when GBB was sitting at just 7 cents. It has jumped six-fold since then, making fortunes for some of our readers and it likely has much further to go. North Arrow is sitting at just 19 cents. A major diamond discovery could turn North Arrow, literally, into a $50 stock. All it would take is one rich pipe. Jennings and Thomas, proven minefinders and legends in the industry, are on the hunt. Don’t miss out on this one because we’re certain North Arrow is sitting on something very significant at Lac de Gras and the Dynamic Diamond Duo of Jennings and Thomas are about to find it.
Click on the link below to listen to our interview with Dr. Jennings:
North Arrow closed Friday, May 28, at 19 cents for a market cap of only $7.5 million. It has a diversified portfolio of diamond, lithium, base metal and gold properties. Drilling is currently underway at its highly prospective Beaverdam Lithium Property in North Carolina.
May 28, 2010
Gold was as high as $1,217 overnight but has softened slightly to $1,207 as of 6:55 am Pacific time…that’s a $5 drop from yesterday’s close…a powerful new move appears to be underway with the CDNX though it’s off to a quiet start today, up just a point at 1504 in early trading…the Index is ahead 8% since last Friday’s low of 1393 which was the bottom of a 15-day correction that shaved 295 points or 17.5% off the CDNX…Gold Bullion Development (GBB, TSX-V) is unchanged at 40.5 cents…all of GBB’s major moving averages are once again back in bullish alignment (the 20-day SMA turned down slightly just recently)…BMR is returning to the Granada Gold Property next week…our first visit was in mid-March…next week’s on-site visit will be for three days (Tuesday through Thursday) when drilling is expected to ramp up in the LONG Bars Zone…Kent Exploration (KEX, TSX-V) is holding steady with firm bids at 18.5 cents…Kent ran as high as 21 cents yesterday on news of an 18-metre intersection at the Gnaweeda Bunarra Zone that graded just over 11 g/t Au…it was a shallow hole (115 to 133 metres) and one of only 3 drilled at Bunarra…Kent should firm up as the significance of that hole is better understood by the market…Richfield Ventures (RVC, TSX-V) continues to trade in a very attractive area right around its rising 200-day moving average…Richfield is up a penny to $1.29…
BMR is heading back to the LONG Bars Zone!
In a Granada Gold Property site visit that will run from next Tuesday through Thursday, BMR will be reporting right from the scene once again on one of the most exciting and important exploration plays in the country as Gold Bullion Development (GBB, TSX-V) ramps up its efforts to prove up a multi-million ounce bulk tonnage, open-pit deposit at Granada.
Be sure to check out our coverage next week as we explore the next major Cadillac Trend discovery from all angles.
With one of the most exciting exploration plays in Canada, investors can expect Gold Bullion Development (GBB, TSX-V) to be a market leader over the coming weeks as the CDNX surges to the upside as predicted here at BMR. John updates GBB’s technical condition prior to the market open this morning:
John: Yesterday, Gold Bullion Development opened at 39 cents, the low for the day, and spent most of the session in the low 40′s. It closed at 40.5 cents, up 2.5 cents. It traded strongly on a very solid day for both the CDNX and Gold. All of GBB’s moving averages are in bullish alignment right now which certainly makes this stock stand out in the crowded space of the CDNX.
Looking at the chart, we see that GBB is trading in an upsloping channel (blue lines). On Tuesday there was a hammer candle (or perhaps a dragonfly doji) indicating a possible bullish reversal. This was followed by an inverted hammer on Wednesday and another one yesterday. These hammers have confirmed the reversal. Strong support is provided by the rising 50SMA.
Looking at the indicators:
The RSI has crossed back above the 50% level – a very bullish sign.
The Full Stochastics %K (black line) crossed over the %D (red line) yesterday and is climbing – a bullish sign.
The Accumulation/Distribution line (A/C) on May 17 crossed up over its 20SMA, indicating that accumulation was again taking place – very bullish.
Outlook: The reversal has occured and is confirmed. The 3 indicators are very bullish for a near term move up. Aided by the strength of other markets, I expect to see new highs with Gold Bullion in the near future.
We correctly called the end of the recent CDNX correction earlier this week, and what normally happens after a major CDNX pullback is the exact opposite – this market has the potential to absolutely explode to the upside. In the span of just one week the technical picture has changed dramatically for the Venture Exchange and massive profits could be made in the weeks ahead for those who understand right now what’s likely unfolding here.
This morning, prior to the market open, BMR’s technical analyst takes a detailed look at the suddenly very bullish CDNX chart:
John: After Wednesday’s impressive gain, the CDNX made another strong move yesterday. At the open it gapped up to 1488, retreated during the day to a low of 1469, and then closed strongly at the high of the day – 1504 – for a gain of 34 points.
Looking at the chart, the CDNX is at a resistance level at 1500 but with the strength shown at the close yesterday (white candle with a shaved top) there should be no problem going higher today.
On the chart I have circled the candles at the reversal. We have two bullish reversal patterns there. The long red candle and the long white candle form a “bullish piercing pattern” and the long white candle and the short white candle create a “bullish reversal harami”.
The bottom of this correction occurred at the same level as a previous low in December, 2009, thus providing strong support for this reversal.
Looking at the indicators:
The RSI has climbed out of the oversold area and is moving toward 50%. It will be very bullish if this 50% line is crossed.
On the RSI I have circled several “W” formations. If you look at the price chart at these times, you will see a low has occurred and sometimes a consolidation. From these lows the RSI has always risen up again to the overbought region (i.e. above 70%). With this reversal the CDNX is on track to climb and make new highs.
The Slow Stochastics %K (black line) has crossed up above the %D (red line) – very bullish.
The Accumulation/Distribution line (A/C) shows the A/C line only dipped below the 20MA (red line) at the beginning of May (the start of the correction) and now is about to go back above the 20MA line – very bullish.
The Fibonacci levels are shown as blue bars with the target level being 1770.
Outlook: The outlook for the CDNX is very bullish, especially after yesterday’s strong move, with our target level now being a new high of 1770.
May 27, 2010
Gold is up $5 an ounce to $1,216 as of 8:00 am Pacific time…the CDNX, meanwhile, continues to surge and is up 27 points to 1497…Gold Bullion Development (GBB, TSX-V) is pushing higher this morning…GBB is ahead 2.5 cents to 40.5 cents…the stock is technically and fundamentally positioned to head significantly higher in the month of June and should be a market leader in this post correction move by the CDNX…Kent Exploration (KEX, TSX-V) started trading again this morning after yesterday’s halt…Kent released drill results from Gnaweeda which included an 18 metre intersection (between 115 and 133 metres depth) at the Bunarra Zone which graded 11.09 g/t Au…Kent gapped up to 21 cents this morning but has since backed off to 18.5 cents on volume of nearly 2 million shares…the Gnaweeda Project clearly holds a lot of promise which should make Kent’s spinoff of Archean Star Resources very successful…Richfield Ventures (RVC, TSX-V) hasn’t yet participated in the Venture recovery and is sitting at $1.30 this morning, up 2 cents, where it’s an attractive buying opportunity…North Arrow Minerals (NAR, TSX-V) has made a nice 5-cent jump this morning (though on fairly light volume) to 22 cents…