BullMarketRun.com

CDNX

The Venture Exchange was down for the fourth consecutive week ending Friday, February 5, as commodities struggled and gold fell as low as $1,040 an ounce. The CDNX reversed intra-day last Friday, however, erasing a 23 point decline and finishing up 3 points for a close of 1,455.

This market is now down 11% from its January high of 1,629, a correction similar to the one we saw last July when the CDNX also came very close to touching its advancing 100-day moving average. Friday’s reversal could prove to be significant but it was on low volume. An encouraging sign, however, is that the CDNX has greatly outperformed gold and the TSX Gold Index over the past two months – that tells us that the gold bull market remains firmly intact, and the next really big move in gold is likely up and not down.

Historically, CDNX corrections within an overall bull market can be quite severe, even in the order of 30% over a short period of time. From a technical perspective we believe it’s critical the CDNX does not break below the 1,400 level. That is where it has very strong support with its 100-day moving average actually at 1,415. We saw this market drop below its 50-day moving average this past week, and the decline straight down to 1,429 was very quick. A drop below 1,400 would suggest a more significant correction is at hand.

However, given the out-performance of the CDNX vs. gold and even the overall markets as a whole, we believe the greater probability is that this market will soon gain traction and we’ll be looking back at this time as a terrific buying opportunity. We therefore like high-quality issues right now, including all the companies in our BullMarketRun.com portfolio, that have been beaten down somewhat in recent days.

In terms of the TSX Gold Index, the HGD (the short Index ETF) ran into severe resistance at its declining 200-day moving average last Friday, as predicted, and fell intra-day from $5.74 to $4.99. We believe this bodes well for a modest recovery in gold and the markets as a whole this coming week.

BullMarketRun.com Portfolio

Gold Bullion Development Corporation (GBB, TSX-V)

Gold Bullion showed renewed strength this past week and from a technical perspective the stock is looking very healthy. GBB was up a penny on the week to 10 cents, right in between its weekly low (.085) and high (.115). New assay results are likely coming out soon from Gold Bullion’s drilling at its Granada Gold Property near Rouyn, Quebec. We have studied the Granada Property intensely and our view is that this former producer along the prolific “Cadillac Trend” has tremendous potential to develop into an economic, open pit, large bulk tonnage deposit with a mineable grade of at least 1 g/t. Bring on the assay results and drill this property like crazy – that’s our position. Granada has strong similarities to other properties in the region that were also former producers and developed into very large deposits. At 10 cents and a market cap of only $8 million, Gold Bullion is highly attractive from a risk-reward ratio. A great exploration story is unfolding here.

Seafield Resources (SFF, TSX-V)

Seafield, which we first recommended at six cents last summer, was actually up on the week as well, gaining 1.5 cents to .215. Patience remains the key here – Seafield’s Colombian property acquisitions have yet to be announced. We have no concerns about Seafield, as we pointed out in our last weekly review, and any weakness in this stock has always been a good buying opportunity. We expect we’ll start to see some fireworks with Seafield sometime this month.

Kent Exploration (KEX, TSX-V)

Kent had a rough week, as expected, with the release of poor gold/silver drilling results from its Flagstaff Property in Washington State. The stock dropped three cents to close at 15 cents Friday. This is a company, however, that has been built over the past year on a very solid foundation. Its New Zealand and Australian properties are first-rate, and of course Flagstaff is still very valuable for its high-grade barite which will likely be brought into production later this year (generating significant cash flow for the company). Kent’s current market cap is only about $5 million – longer-term investors understand the value here and are accumulating this stock right now at undervalued prices. We expect Kent will turn around sharply when drilling commences at Gnaweeda in Australia and possibily Alexander River in New Zealand.

Greencastle Resources (VGN, TSX-V)

Greencastle suffered with the overall market and closed at just 16 cents last Friday, down 2.5 cents on the week. Any weakness in Greencastle is clearly a buying opportunity as this company is trading at just a small premium to its cash value. Its Boggy Lake-Cabri oil project in southwestern Saskatchewan could ultimately propel this stock to new all-time highs in the coming months. The company has regular monthly cash flow of around $120,000 from its Primate royalties, as well as valuable gold assets in Nevada and a strategically located coal property in Manitoba near a discovery last year by Westcore Energy (WTR, TSX-V). With a market cap of just $7 million, it’s hard not to feel safe, secure and very optimistic with this play.

Richfield Ventures (RVC, TSX-V)

Richfield closed under $1.00 Friday (98 cents for a 2 cent loss on the week) for the first time since late October. As we have mentioned repeatedly, Richfield has been under pressure recently due to cheap private placement stock that has become free trading. There is also a winter break in drilling at the Blackwater project in the Interior of BC, which could possibly contain several million ounces of gold. We believe the stock will continue to drift for a while longer but longer term investors should consider building positions during this period of weakness which may not last for more than another month or two.

Colombian Mines Corporation (CMJ, TSX-V)

Colombian Mines jumped 16 cents on the week to close at 91 cents. It announced it will likely begin drilling its promising Yarumalito Property in Colombia this coming week. CMJ has strong roots in Colombia and has built up a tremendous portfolio of high quality exploration projects there, so we’re convinced this is an important holding for anyone who is bullish on both gold and Colombia.

The markets are trying to bounce back this morning and have recovered some of their losses from the first hour of trading…the CDNX has strong technical support just above 1,415 and as of 8:30 am is off its lows of the day at 1,440…gold is off another $7.00 per ounce to $1,056, but the TSX Gold Index is up 4 points now to 302…we like the action we’re seeing in Gold Bullion Development Corporation (GBB, TSX-V) and Ventana Gold (VEN, TSX)…Ventana was under pressure during yesterday’s market drop but reversed during the day and is showing continued strength this morning…Ventana’s news release yesterday tells us they fully expect to win the legal dispute over La Bodega, and the market seems to be starting to agree with that…conservatively, at just under $8 per share, Ventana is likely trading at half its true value…new assay results could be just around the corner for Gold Bullion…we have studied GBB’s Granada Property in considerable detail and what we believe is emerging there is a very substantial bulk tonnage deposit…Gold Bullion’s chart is looking very favorable and a breakout to new yearly highs appears to be in the works…

After encouraging signs early this week, which even fooled us, gold suddenly and violently went into reverse this morning and is now down a whopping $47 on the day to $1,063 as of 8:50 am Pacific time…the good news is, we know that gold has tremendous support around the $1,025 area which means the precious metal is only $35 off our worst-case scenario bottom (we may not even reach that) which we have warned has been a possibility (a “head fake” as we suggested, prior to a massive run to the upside)…gold’s bull market remains firmly intact, even with a drop back to $1,000, as it continues to be underpinned by a rising 200-day moving average…sharp sell-offs as we’re now witnessing have always been a buying opportunity in gold over the last decade…an all-out crash in commodities is simply not confirmed by the CDNX…the Venture is down heavily this morning to 1,466, dropping below its 50-day moving average for the first time since July of last year…keep in mind, however, the CDNX is essentially unchanged from its December high while gold is down 13% and the TSX Gold Index is off 24%…this bullish divergence, which is the opposite to what we saw prior to the crash of 2008, strongly suggests that a crash now is simply not in the cards…we are embracing this correction and buying into high quality situations on weakness…at the top of that list is Gold Bullion Development Corporation (GBB, TSX-V) which we believe is on the verge of a significant discovery at its Granada Gold Property near Rouyn, Quebec…Gold Bullion jumped 2 cents yesterday to .115 and is down a penny in a weak overall market this morning to .105…buying into weakness is how money is made in the markets…

The markets have pulled back a bit this morning as we expected (and hoped) with gold off $6.00 an ounce as of 10:00 am Pacific time to $1,108…it ran as high as $1,126 overnight…a test of $1,100 is certainly possible before another move to the upside…gold’s 30-day moving average, which has been in decline for a while now, is very close to reversing – an event that should happen by next week, which suggests a significant run is in the works…the CDNX is down 8 points to 1,509…we sense that Gold Bullion Development Corporation (GBB, TSX-V) is in the beginning stages of a powerful new breakout that would likely take it to a new yearly high in the very near future…it’s currently at .095, even on the day, but almost all trades so far this morning have been at 10 cents…many investors initially didn’t grasp the significance of Gold Bullion’s January 26 news release on results from Granada, and the stock sold off in the market downturn to .085…but GBB has gained traction in recent days and additional assay results should be released shortly…it’s our contention that Gold Bullion’s Granada property, just 40 miles to the west of Osisko’s Malartic Deposit, quite possibly contains several million ounces of shallow, low grade gold – a substantial bulk tonnage, open pit deposit with even slightly higher grades than Malartic…we will be expanding on this in simple language in some articles over the next week…Gold Bullion’s current market cap is only $7.6 million…

The bullish divergence we have been writing about recently between the CDNX, the TSX Gold Index and gold itself seems to have correctly predicted a move in the price of gold which is up again this morning to $1,115 per ounce…gold has now jumped $35 over the past two days, and a gentle pullback and a consolidation between $1,100 and $1,120 would be healthy from a technical standpoint…the bullish divergence theory has proven to be extremely accurate and suggests that gold and commodities in general are headed much higher…there are conflicting indicators, though, including a stronger U.S. dollar…the CDNX is up six points to 1,516 as of 9:50 am Pacific time…Ventana Gold (VEN, TSX), which is not part of our portfolio but which we wrote about yesterday, has indeed broken out technically and at 9:50 am is now at $7.80, up 44 cents…we were buyers yesterday at $7.20 and $7.34…Ventana is very undervalued, given the size of its resource at La Bodega in Colombia, and there seems to be a growing realization that it will have no difficulty winning its legal dispute with the La Bodega property vendors through the arbitration process or prior to that in a cash settlement…Ventana appears headed for its 100-day moving average just under $9.00…all is quiet with our portfolio this morning…Richfield Ventures (RVC, TSX-V) is showing signs of bottoming out at the $1.00 level where we consider it a very attractive long-term buy though it could still test support around the 90 cent area…

The markets have rebounded this morning with gold up $19.00 to $1,099 as of 10:00 am Pacific time…the Venture Exchange is up six points to 1,498…as expected, Kent Exploration (KEX, TSX-V) took a hit first thing this morning, dropping to .135 as some nervous nellies dumped their stock after Friday afternoon’s negative drilling news regarding Kent’s Flagstaff Mountain Property…there is tremendous underlying value with Kent which is why it is now trading at a daily high of 16 cents…while it’s not in our portfolio, traders should keep an eye on Ventana Gold (VEN, TSX) which now appears to be on the rebound after falling just below its 200-day moving average last week…technically, this stock is looking much healthier now and could be poised for a huge comeback…Ventana is up 30 cents to $7.39 as of 10:00 am, and a reversal in its short-term moving averages appears imminent after a steady decline through December and January…a stock under 20 cents with strong momentum now is Greencastle Resources (VGN, TSX-V) which is part of our portfolio…a chart often tells a thousand words, and Greencastle’s chart is telling us much about where this stock is likely headed…all moving averages are in bullish alignment and the stock has put in a series of higher lows since early 2009…