There has been a noticeable pick-up in activity in North Arrow Minerals (NAR, TSX-V) over the past month – the stock has been under accumulation since the middle of March – and we have every reason to believe this is just the start of something potentially very big in the making. NAR’s bullish technicals are sending us a clear signal – the market is starting to recognize the value of its diamond and lithium projects.
All of North Arrow’s moving averages are in bullish alignment. As our technical analyst points out below, NAR seems poised to blast through 25 cents and take a run at resistance between 35 and 40 cents:
John: Looking at the 18-month weekly chart, we see that over the past 16 weeks North Arrow has been consolidating after a move up from 14 cents to 24 cents in one week when only 800,000 shares were traded in a range of 15 to 25 cents. During the last 7 weeks it has gradually climbed, closing Friday at 24.5 cents.
This trading has formed a bullish ascending triangle and the stock, although low in volume, is threatening to break through the top of the triangle (horizontal blue line).
The dotted green lines show a resistance band between 35 and 40 cents. If the price breaks above 25 cents this coming week, it should have no problem reaching the resistance starting at 35 cents. The volume needs to increase to ensure the force required.
The RSI indicator is rising as it shows the strength increasing.
The Acc./Dist. indicator shows the stock has been under accumulation since the middle of March, 2010.
The ADX trend indicator has the ADX (black line) trend strength indicator rising and the +DI (green line) is above the -DI (red line), confirming the trend is up and getting stronger.
Up until now at least, North Arrow has been a fairly thinly traded stock. Liquidity in NAR is not what it’s like in Gold Bullion, Sidon or others in the BMR portfolio. However, as Jon has pointed out, investors shouldn’t go into North Arrow with the intention to “flip” this stock in a few days, a week or even a month. This is a special situation that has the potential of delivering astonishing returns over a period of 6 to 9 months. Over the short term we’re likely to see increased accumulation of North Arrow up to the resistance band between 35 and 40 cents.
The outlook for North Arrow is clearly bullish but higher volumes are required to sustain a major move up.