CDNX
On the morning of March 19 we expressed concern the Venture was looking a little “toppish” and recommended raising cash levels in the event of a minor pullback, perhaps 5% on the Index. For the first time in over a year the CDNX’s 50-day moving average (SMA) was starting to decline, a cautionary “red flag”. The market did weaken slightly but not significantly. This is okay – it never hurts to take some profits off the table and sit on some extra cash for a short period of time while the market sorts itself out and gives a clearer direction. Not only are we focused on “home run” opportunities at BullMarketRun – and we have certainly provided them – but we’re also concerned about the preservation of the wealth we build. So when the market gives us a “Proceed With Caution” sign, we pay attention.
The CDNX found support at 1548 this week and closed the week at 1560, just a 4-point decline from last Friday. The resilience the Venture Exchange has shown over the past five trading sessions is rather remarkable considering the weakness in gold, month-end selling pressures (Friday was settlement day) and a declining 50-day SMA. Seeing this resilience as the week progressed, we weren’t overly concerned with gold’s drop into the $1,080’s – the CDNX has consistently been an incredibly accurate leading indicator of the direction of the precious metals/overall commodities markets. Any collapse in those markets would be preceded by an accelerated downward move and breakdown in the CDNX as we witnessed in the summer of 2008.
A stunning and very revealing statistic is that since early December, when gold hit an all-time high of $1,225 an ounce, the Venture Exchange has actually gained 6% (94 points) while the TSX Gold Index has dropped 21% and gold itself is down 11%. This is a bullish divergence that confirms to us that gold and commodities are in another long-term uptrend with the possibility of a near-term crash very remote. The CDNX is the most accurate leading indicator we’ve seen – don’t let certain analysts scare you that a crash even worse than 2008 is about to happen any day now. The CDNX says NO.
If the CDNX continues to hold its ground next week above the 50-day SMA of 1535, then a bullish scenario is likely to start unfolding for April. Overbought RSI levels on the CDNX have backed off, increasing the possibility of a move back up in the Index. In fact, the RSI dropped to 50 this past week on the CDNX and that’s a level from which significant rallies have ensued over the past year.
Gold had an interesting week and escaped relatively unharmed from a major surge in the American dollar. A pattern seems to be forming with gold making higher lows as the U.S. dollar makes higher highs. This has to be encouraging for gold bulls. And so too is the fact the U.S. dollar has hit 70 on the RSI – in most cases when this happens, gold starts to rally along with gold shares. We saw that Friday with gold up $16 an ounce along with strong moves in the CDNX and the TSX Gold Index.
BullMarketRun Portfolio
Gold Bullion Development (GBB, TSX-V) went through some much needed consolidation this week to help unwind its overbought technical condition that emerged after last Friday’s run to 30 cents on nearly 7 million shares…GBB snapped a four-session losing steak Friday with a 2 cent gain to close the week down just a penny at 26.5 cents…there is little doubt in our mind that things are moving rapidly at the moment with this company…there has been HUGE demand for their recently announced private placement which late Friday was amended to $4 million from $3.22 million…word is, the PP is fully spoken for and will close very quickly…this, we believe, will be followed by the release of a preliminary resource block model for the LONG Bars zone at Granada, new assay results, and details on a very large Phase 3 drill program that should commence by the end of April/early May…the market will have a lot to speculate about in the days ahead…a breakout to a new all-time high for Gold Bullion appears almost certain when one examines the chart and grasps the fundamentals – Granada has all the makings of a world class bulk tonnage, open-pit deposit…one that is near-surface and surrounded by excellent infrastructure…rumor has it, Osisko (OSK, TSX) and others are keeping a close eye on developments with Gold Bullion which doesn’t surprise us one bit…
Seafield Resources (SFF, TSX-V)
Seafield had a fairly quiet week and closed unchanged at 26 cents…the key to making money in Seafield over the past six months or so has been to “play the swings”, buying into weakness and selling into strength…that would suggest now is the time to be accumulating Seafield…we expect this stock will eventually break out to new all-time highs in the upcoming second quarter when drilling commences at the company’s gold properties in the Quinchia district of Colombia…at 26 cents, Seafield is up 333% since we uncovered this gem last summer at a mere 6 cents…
Kent Exploration (KEX, TSX-V)
As our article stated Thursday, keep sowing the money seeds with Kent…this stock has not busted loose yet like GBB, SFF, RVC or CMJ, but its turn will come…Kent has an excellent portfolio of properties and the right management and expertise to develop them in a way that will significantly build shareholder value and wealth…Kent announced Friday that it has completed 5 holes and 1,137 metres of drilling at its highly prospective Turnberry Prospect in western Australia (Gnaweeda joint venture with Teck)…Kent has also commenced an IP survey to help identify targets in advance of a drill program at Alexander River in New Zealand…the company’s AGM is coming up April 30 when shareholders will be voting on the proposed spin-off of the Gnaweeda project into Archean Star Resources…Kent shareholders will receive one share of Archean Star (which will trade on the TSX-V) for every four shares of Kent which closed Friday at 16.5 cents, down 1.5 cents on the week…
Greencastle Resources (VGN, TSX-V)
Greencastle continues to struggle and is the only stock in the BullMarketRun portfolio that has actually gone down in value from when we first highlighted it…Greencastle was off another penny this week to 13 cents, so the company now is trading at just its cash value which means there is little downside risk from here…the recent weakness in Greencastle was brought on by disappointing news regarding two wells the company and its partners recently drilled and cased near Cabri in southwestern Saskatchewan…that oil and gas play isn’t over, however (Greencastle has a large land package in that area), and Greencastle also holds other significant assets including royalties from the Primate oil field and gold properties in Nevada…great stock to accumulate at current levels for those with a longer-term outlook…
Richfield Ventures (RVC, TSX-V)
Richfield has pulled back from overbought levels as expected, closing Friday at $1.81 for a 34 cent loss on the week…Richfield could correct a bit more, but we expect this stock to have a strong April as drilling starts up again at its Blackwater Project in central British Columbia…like Gold Bullion, Richfield is developing a world class bulk tonnage, open-pit deposit…
Colombian Mines Corporation (CMJ, TSX-V)
Colombian Mines continues to look strong though it lost 8 cents this week to close at $1.31…the possibility of a declining 10-day SMA may put a little more downward pressure on the stock by the middle of next week, but any additional weakness should be regarded as a buying opportunity…CMJ has a terrific portfolio of gold properties in Colombia and currently has 2 drill rigs at Yarmualito…
