BullMarketRun.com

BullMarketRun.com is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinin or other advice is being rendered on any stock or company.  We strongly recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions.  The stocks we cover, by definition, are highly speculative and potentially very volatile.  Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisors. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.  It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

The BMR Portfolio (Part 3 of 3, GBB was covered separately in Part 2)

Seafield Resources (SFF, TSX-V)

Seafield is up just over 50% from its lows of last month, closing Friday at 25 cents (unchanged for the week) on total weekly CDNX volume of 4 million shares (half of that on Friday)…we have followed this company very closely over the last year after we first uncovered this gem for BMR readers at just 6 cents…Seafield holds an impressive land package with some advanced properties in the Quinchia District of Colombia, part of the prolific mid-Cauca Belt where some major gold/copper deposits have been discovered…the company has a clear game plan and the right people on the ground (Ian Park and Stewart Redwood) with the experience and expertise to develop the Quinchia Project to its fullest potential…Seafield believes it has an excellent chance to define a series of deposits at Quinchia that can combine for a total resource in the neighborhood of 3 to 5 million ounces…prior to Seafield starting any drilling at Quinchia, Miraflores and Dos Quebradas already had a combined compliant and non-compliant inferred resource of 1.6 million ounces…Dos Quebradas holds tremendous blue sky potential along with a third property, Chuscal…so the geological case for Seafield is a strong one. …the current market cap of just under $25 million offers a lot of upside potential if these 3 major properties can deliver – we believe the odds are very good that they will…

Richfield Ventures (RVC, TSX-V)

In less than 3 months Richfield has more than tripled in value and after Friday’s close of $2.76, RVC is up 130% since we introduced this company to BMR readers last December…Richfield is awaiting final CDNX approval on its recently completed $14,625,000 financing at $1.95…the company now has close to $20 million in the bank, a substantial war chest to develop its potential multi-million ounce Blackwater Project in central British Columbia…Peter Bernier’s strategy with Richfield was made very clear in a news release last Monday when the company announced than Rob Pease was appointed an “adviser” to Richfield’s board of directors…the second paragraph of the release stated, “He (Rob Pease) was instrumental in the takeover of Terrane Metals by Thompson Creek Metals Company Inc., which is planned to close in the coming weeks”…Bernier is priming Richfield for a potential takeover but what must come first is a 43-101 resource estimate for Blackwater which the company is working toward…Richfield’s current market cap is approximately $100 million…the potential takeover price would be considerably higher if Richfield is able to outline at least 4 million ounces at Blackwater which also contains copper and silver credits…given many long intersections of 1 g/t Au reported over the last year, the possibility of at least 4 million ounces of Gold at Blackwater certainly exists…

Sidon International Resources (SD, TSX-V)

Sidon was hit with some selling this past week (why, we’re not really sure but that’s the market), falling as low as 12 cents and closing Friday at 12.5 cents – a 1 penny drop for the week on total CDNX volume of approximately 9 million shares…for the first time since early July Sidon has closed below its rising 50-day moving average…the stock is trading within a tremendous area of technical support, however, and we just can’t see it dropping below 10 cents…bargain hunters should be watching this one closely for the possibility of buying into any additional weakness in the immediate future…we anticipate a very strong final quarter of the year for Sidon as it begins to work aggressively on exploring its Morogoro East Gold Property in Tanzania…the stock is up 150% since we introduced it to BMR readers last spring at a nickel…

Colombian Mines Corporation (CAJ, TSX-V)

Colombian Mines closed Friday at 92 cents, a 3-cent gain for the week and a 53% increase since BMR added CMJ to its portfolio late last year (the stock got as high as $1.62 in March)…more drill results are expected soon from Colombian’s flagship Yarumalito Gold/Copper Property in the Marmato Mining District…broad zones of gold/copper mineralization have been intersected at Yarumalito this year including 141.4 metres grading 0.77 g/t Au in YAR-11…the company had just over $3 million in working capital at the end of July, so it’s well positioned to continue drilling Yarumalito through the end of the year as well as advance some other projects in its very large Colombian land package (over 150,000 hectares)…interest in Colombian plays is heating up again and we expect CMJ will be a very strong performer in the months ahead…

North Arrow Minerals (NAR, TSX-V)

This is the final week for North Arrow in the BMR Portfolio unless it begins to flex its muscles and shows us something…we’ve been very patient with this company which has essentially drifted aimlessly since we introduced it to BMR readers last April…the biggest disappointment for us has been North Arrow’s inability to carry out a drill program this summer/early fall at its Lac de Gras diamond property in the Northwest Territories…the company just recently received a drill permit but says it’s now too late in the year to drill at Lac de Gras and has rescheduled drilling there until next spring…the company has some other properties in its portfolio and President and CEO Gren Thomas has also been searching for new opportunities…there is great potential with North Arrow but it seems increasingly likely that this company will continue to drift until sometime next year… we’ll make another check on things with NAR this week before making a final decision on its status in the BMR Portfolio…

“Watch List”

Excel Gold Mining Inc. (EGM, TSX-V)

We continue our due diligence on Excel which closed the week at 16 cents…there is a lot we like about this company which holds the former Montauban Mine in Quebec (gold, silver and base metals) along with a large land package surrounding it…to no one’s surprise, Excel has announced that Gold Bullion President and CEO Frank Basa has joined its board of directors (along with another Gold Bullion director, Jacques Monette)…we were first tipped off to this potential development a few months ago when Basa’s private company (Grupo Moje) was awarded stock options (in a consulting capacity) in Excel (June 25 news release)…we’ve seen what Basa has done with Gold Bullion at Granada…his involvement with Excel should be very positive for that company…there appears to be strong local support for the re-starting of production at Montauban and the company is confident it will discover extensions to the mineralized structures at the former mine…Excel reported some very encouraging results earlier this year from a shallow drill program at Montauban…it’s currently compiling historical data on the former mine in advance of another drill program in the final quarter of this year…

The BMR Portfolio (Part 2 of 3)

Gold Bullion Development (GBB, TSX-V)

It was an important week for Gold Bullion as the company announced it has arranged its largest financing ever, a $6 million non-brokered private placement at 54 cents…each of the approximate 11 million units includes a half warrant at 75 cents…the advantages of a measured financing now are very clear…the company increases its cash resources to nearly $9 million, ensuring it has all the capital it requires to carry out even more aggressive exploration at Granada without the need to go back to the market for another financing until at least the spring of next year…the way this project is developing, Gold Bullion at some point will require a lot more money than it’s now raising but chances are that can be done at significantly higher prices next year if results start to come in as expected at Granada…a $6 million financing now is not very dilutive (less than 10%), and some key players get positioned in the stock at a favorable price (earlier this month GBB hit an all-time high of 79 cents)…the stock has stabilized and has tremendous technical support in the low 50’s where the rising 100-day moving average is located…on the ground in the LONG Bars Zone, Gold Bullion is completing an additional 5,000 metres of drilling with GENIVAR going after some high priority targets… another set of assay results can’t be far off and we’re expecting even better numbers than those released just over 2 weeks ago based on GENIVAR’s visual observations as reported in Gold Bullion’s September 9 news release…the stock closed Friday at 55 cents, a 3-cent drop for the week…Frank Basa is executing his plan at Granada – DRILL, DRILL, and DRILL some more…given our very bullish outlook for Gold and the CDNX over the next 6 months, and our understanding of the potential of the LONG Bars Zone, the Son of Osisko is rising in northwestern Quebec and could soon be shining very brightly…

John: On Friday, Seafield Resources (SFF, TSX-V) opened at 24.5 cents, drifted to a low of 23.5 cents, rose to a high of 25.5 cents and then closed at 25 cents with 1.9 million CDNX shares traded for a half cent gain on the day. The company has consistently stated that initial drill results from its Miraflores property in the Quinchia District in Colombia are expected by the end of September, which now means next week.  The increased volume Friday indicates we may indeed get news next week.  BMR is very bullish on Seafield’s Quinchia property package which includes Miraflores, Dos Quebradas and Chuscal.

On September 6 we presented an update on SFF.  I stated at that time:   “I expect in the near future Seafield will finally overcome resistance at 22 cents and take a run to the next resistance area around 30 cents. The stock is a lot tighter now and drill results are expected sometime this month.”

Looking at the 6-month daily chart we see that the stock has not only overcome the resistance at 22 cents but has climbed as high as 26.5 cents at which point it started to decline and form a handle (downsloping blue lines) to the cup (mauve lines). Last Thursday SFF broke above the handle and continued up on Friday.   There are two sets of Fibonacci levels shown. The blue set has 0% base at 16 cents and the top of the Seed Wave is the 100% level at 24 cents. The 161.8% level or the next Fibonacci target is shown at 29 cents.   The green Fibonacci set using a 16 cent base and 29 cents as the 100% level shows that after the 29 cent level has been reached the next target is at 38 cents, just above its 2010 high of 35.5 cents.   The chart also shows there is a resistance level around 30 cents (horizontal blue line). This 30 cent resistance level and the 29 cent Fibonacci target create a resistance band at 29-30 cents.   Just a brief word here. When I show a resistance level, band or target I do not mean to imply that the stock price must stop there. These points create an awareness for the investor that there is a higher probability that at those levels the stock price will at least hesitate or pause.   In order for the price to break the resistance at the top of the handle at 26 cents we need the high volume levels to continue.

Looking at the indicators:

The RSI has turned up and is below the overbought area –  bullish.

The Slow Stochastics shows that the %K (black line) has crossed above the %D (red line) and is pointing up and is still neutral – bullish.

The Chaikin Money Flow (CMF) indicator has started to climb in the last 2 trading sessions after declining during the formation of the handle. This shows an increase in buying pressure. Note the CMF was in the green even when the handle was being formed –  very bullish.

Outlook: With the increase in price in the last 2 days, the relatively high volume on Friday and the increased buying pressure we could easily see a good move with SFF during the coming week especially with the possibility of some Miraflores drill results and an overall exploration update from Quinchia.  All the ducks appear to be lined up.

CDNX and Gold

On August 29, BMR issued an Investor Alert:  “September is shaping up to be a possibly dramatic month of trading for the CDNX with BMR anticipating a major upside breakout.”

Indeed, September has been an incredible month so far for the CDNX with a major spike in volume and a 200-point advance (13%) in 17 trading sessions.  Our “big picture” macro view is that the CDNX is in the midst of an historic bull run that started in late 2008 and will not top out until the “Gold Mania Phase” kicks in (which we’re not even close to right now).  After the masses jump on board, just like what happened with the “Dot Com” craze a decade ago, the CDNX could easily be at 3000, 4000 or 5000 – anything is possible.  The investor appetite for junior mining stocks, in our view, is only beginning.  There are a lot of fundamental factors behind this which we have written about already and will continue to write about.  Gold is becoming an alternative currency, and the impact of China (as well as other emerging countries) on the Gold market and commodities in general is hugely significant.

The CDNX enjoyed its sixth consecutive weekly advance, closing Friday at 1699.55.  It’s up 17% in six weeks and a whopping 27% since the July 6 low of 1343.  At some point in the near future, of course, there WILL be a minor pullback in the CDNX.  By minor we mean likely only about 5% as the technical and fundamental underpinnings of this market are just too powerful right now to suggest a deeper correction, and of course we already recently went through a 20% sell-off which ended in early July.  This past week the CDNX showed some signs of temporary exhaustion as John outlined in his article Thursday.  The Index is clearly in overbought territory and a pullback now would be a welcome and healthy development.  The probability of an imminent minor correction has increased significantly.  We’ll see what the coming week brings.  It’s possible this market could become even more overbought in the next week or two before a correction sets in, but the warning flag has been raised.

Given the extremely bullish outlook for the CDNX over the next six months, a few strategies investors should consider are as follows:

1. Maintain a core position in high quality junior mining stocks.  The primary trend is up.  Don’t try to time the market’s every move because that’s impossible to do;

2. When buying new stocks at this particular time, avoid buying ones that are already excessively overbought (based on indicators such as RSI and Stochastics).  Look for stocks that are consolidating or coming out of a consolidation;

3. Keep some cash available or easily accessible for buying into any significant weakness whenever it should occur;

4. Do not “chase” an already heavily overbought stock and do not borrow  money to invest;

5. Cut your losses short (eliminate any under-performers) and let your profits run.

Gold hit $1,300 this past week for the first time ever and Silver jumped above $21 for the first time since October of 1980.  Gold closed Friday at $1,297 , gaining $23 for the week after a $27 gain the week before.  There are many factors driving Gold right now including those mentioned above as well as central bank buying, investment buying and a very accomodating U.S. Federal Reserve which came out with this important statement last Tuesday which was music to the ears of the Gold bugs:  The Fed is “prepared to provide additional accomodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.” The Fed, which has clearly shown its desire to engage in further “Quantitative Easing” (QE), doesn’t seem to be too concerned about a falling U.S. Dollar which tanked this past week to 79.27 on the Index.  A lower U.S. Dollar (a gradual and controlled drop from current levels) may indeed be viewed positively by the Fed as that will give inflation a desired boost (higher import prices) and help American exporters.

Gold topped $1,300 for the first ever ever this morning, climbing as high as $1,301.30 as the U.S. Dollar took another hit…it seems the Fed is content with a lower U.S. Dollar as that will help the U.S. manufacturing sector, giving a boost to the economy and also increasing inflationary pressures which is consistent with the Fed’s goals as outlined in its Tuesday statement…as of 7:30 am Pacific, the yellow metal is at $1,298, up $6 for the day…the CDNX is trying hard to get through resistance around 1700…the CDNX is clearly in overbought territory and has been showing some signs of exhaustion in recent days, as John outlined in an excellent piece last night…it’s up 13 points at the moment at 1701…while the probability of a minor near-term pullback has certainly increased, our macro view is that we’re in the midst of a move of historic proportions in the CDNX which could drive this market well past 2000 by early next year…investors should continue to hold high quality junior mining stocks but keep some cash available for buying any dips that will occur…in buying new stocks right now, look for ones that aren’t heavily overbought and are perhaps coming out of a recent consolidation…Currie Rose Resources (CUI, TSX-V), which we mentioned recently when it was sitting at 10 cents, is an excellent example of that…another one we like at the moment is Goldquest Mining (GQC, TSX-V) which has a terrific portfolio of projects in the Dominican Republic as well as a substantial zinc-lead-silver deposit in Spain…Goldquest just came out with news this morning and its chart is looking very powerful….it’s currently up 2.5 cents to 17 cents…we’ll have more on Goldquest in the coming days…Gold Bullion Development (GBB, TSX-V) is up 2 pennies to 56 cents…we can’t emphasize enough how bullish we continue to be on Gold Bullion and its Granada Gold Property…the stock price has come down from the high 70’s to the mid-50’s where it has exceptional technical support…we expect the company’s $6 million financing at 54 cents will close quickly…Seafield Resources (SFF, TSX-V) is off half a penny to 24 cents this morning…interest in Colombian plays has been heating up recently and Seafield has a very promissing and underrated 67 square kilometre land package at Quinchia…we expect an exploration update soon from Seafield including initial drill results from Miraflores which the company started drilling near the end of June…technically, the stock is looking strong and is not heavily overbought at the moment…Sidon International (SD, TSX-V) has shown some weakness in recent days which is a gift in our view as Sidon is sure to strengthen as exploration ramps up at its Morogoro East Property in Tanzania…

At BMR, not only do we consider the CDNX to be a major exchange exerting a significant influence in numerous sectors but we consider it to be an extremely reliable leading indicator with respect to precious and base metals.  Tonight we will investigate the relationship between the CDNX Index and the price of Gold (continuous contract) and analyze the current situation with the CDNX with a view to the immediate future.

Let us start with a look at the 6-month daily comparative chart of Gold (continuous contract) and the CDNX. On this chart the CDNX is the focus in candle format with the price of Gold shown as a single black line.

Looking at the chart we see that up until May 1 both the CDNX and Gold were moving in tandem.  At that point the CDNX started to decline from a high of around 1690 down to a low of 1343 during the first week of July.  Gold, on the other hand, continued to climb until it peaked around June 25 (thin vertical orange line) and only then did it begin to decline, thus lagging behind the CDNX.

The CDNX bottomed out between July 4 and July 20 (ahead of Gold) and then started to climb, forming a 5 Wave Motive Phase as described on a previous chart. Gold declined to a low around July 26 and then reversed to start a new uptrend and continued to climb to its position today.  We identified these very important and interesting developments in mid-July and alerted BMR readers to the strong possibility of an imminent major move in both Gold and the CDNX which is exactly what has occurred.

I have drawn four vertical blue lines to show how accurately the Slow Stochastics indicator can identify the CDNX tops and bottoms.     During the last 3 days the CDNX trading has formed an “evening star” 3 candle pattern which is a top pattern indicating that a reversal could be imminent. This pattern has to be confirmed by indicators which we will see later. We also see that the volume over the past few trading sessions has been very high and the Index has not continued to climb, thus a sign of weakness. The bears are challenging the bulls.

On the chart I have shown a horizontal blue resistance line at 1700 and the Fibonacci retracement levels for Wave #5. We have previously stated that we do not expect any retracement to be more than approximately 5% (1700 x .05 = 85, thus a drop to about 1615 which is very close to the Fib. 38.5% retracement level of 1625 shown on the chart).

The daily EMA(20) provides strong support and the chart shows the Index has moved a long distance from this moving average. When that occurs a correction is required.

Looking at the CDNX indicators:

The daily RSI is high in the overbought region at 90% and has been overbought for the last 4 weeks. This supports the evening star candle pattern that a top has been reached and a correction can be expected.   The Slow Stochastics is also overbought and the %K (black line) has crossed down over the %D (red line) above the 70% line, thus also supporting the evening star.

Outlook for the CDNX:  The reversal candle pattern is confirmed by the positions of both indicators (RSI and Slow Stochastics), so a reversal on the CDNX chart is probable.  This should be viewed as a healthy correction to alleviate the overbought conditions and the decline should not exceed the Fibonacci 38.2% retracement level (only a 5% pullback in the CDNX).  The primary bullish trend remains firmly in place and after a minor correction the CDNX will continue on its march toward a possible new all-time high of over 3,300 as we believe the CDNX is in the midst of a move of historic proportions.

How should traders and investors approach the current situation?  Thursday’s Morning Musings summed that up very well:

“Our macro view, as we have already outlined, is that the CDNX is in the midst of a bull market run of historic proportions, so the next 6 months look extremely bullish…rather than try to time the market’s moves from week to week, in an environment such as this the wisest strategy is to keep holding high quality junior mining stocks and also have some cash available for buying on any dips whenever they may come.”

Gold was taking a breather earlier today as if it were pondering whether to push immediately above $1,300 or not…the yellow metal dropped as low as $1,286 this morning but it’s now pushing higher again, currently up $3 an ounce (as of 9:00 am Pacific) to $1,294…we’re watching the CDNX closely for signs of temporary exhaustion after the explosive move we’ve just witnessed…we view the downside risk as quite limited, perhaps 5%, but even a minor pullback such as that would open up some excellent opportunities in certain stocks…the CDNX is currently up 3 points to 1692…it’s also possible the Index could keep climbing higher in the days ahead and that we won’t get a significant pullback until October…our macro view, as we have already outlined, is that the CDNX is in the midst of a bull market run of historic proportions, so the next 6 months look extremely bullish…rather than try to time the market’s moves from week to week, in an environment such as this the wisest strategy is to keep holding high quality junior mining stocks and also have some cash available for buying on any dips whenever they may come…there is no better time than now, we believe, to be a shareholder in Gold Bullion Development (GBB, TSX-V)…the company has arranged a $6 million financing at 54 cents which ensures the continuing rapid development of the Granada Gold Property as the next potential major open-pit deposit in northwestern Quebec…the stock has tremendous technical support in the low ’50’s…a drop below that appears highly unlikely…the stock was driven down recently, in our view, by the “big money boys” who wanted to do a financing at these favorable prices and that’s perfectly fine…ironically, the success of Gold Bullion’s Phase 2 program as outlined in the company’s September 9 news release appears to have brought this on…some very good holes are expected to come in yet from Phase 2 and the “big boys” are loading up with private placement stock (with a half warrant attached to each 54-cent unit) at just the right time…fear and greed rule the markets, that’s just the way it is and investors should never forget that…Gold Bullion is currently down 3 pennies to 55 cents…investors also shouldn’t forget that Gold Bullion ran up nearly 50% during its most recent financing in the spring…we’re keeping a close watch on Seafield Resources (SFF, TSX-V) as we’re expecting news very soon from its exploration activities in the Quinchia District of Colombia…the possibility of some impressive initial drill results from Miraflores certainly exists, and the company is also expected to start drilling targets at Dos Quebradas shortly…Miraflores already has a 43-101 inferred resource of 800,000 ounces and Dos Quebradas, with a lot of blue sky potential, has a non-compliant in-house estimate of 800,000 ounces…Seafield’s strategy is to outline a series of deposits at Quinchia (Miraflores, Dos Quebradas and Chuscal) that total 3 to 5 million ounces…we also wouldn’t be surprised to see Seafield come up with a new President and CEO to replace Tony Roodenburg whose expertise is more suited to building Greencastle Resources (VGN, TSX-V) for which he is also President and CEO…Seafield is currently at 23 cents, down half a penny on the day but trading at strong support…Sidon International (SD, TSX-V) is showing some weakness, dropping as low as 12.5 cents this morning (it’s currently at 13 cents)…we see no reason for concern, however, and in fact we view this as a good accumulation opportunity…Currie Rose Resources (CUI, TSX-V), another Tanzanian explorer we like, is up another 1.5 cents to 13 cents…it has a great looking chart and the company is making preparations for a drill program to begin in the near future…Currie Rose also has a property of merit in Sudbury which is joint ventured with Trueclaim Exploration (TRM, TSX-V)…