CDNX
We declared the recent correction over in the CDNX last Sunday, and that proved to be the right call as the market was all up all four trading days this past week and broke through the 1,500 mark again. The Venture closed Friday, February 19, at 1,532, its ninth winning session out of 10 after a 62-point decline February 4. This market is up 7% since the low of 1,429 February 5, and appears ready to make an assault on the January high of 1,629. We expect the CDNX’s 20-day moving average will turn positive this coming week, so a strong finish to the month is likely along with a potentially powerful move as March gets underway. Any minor pullback early this week in the CDNX, if it should occur, has to be embraced as a buying opportunity. The rising 50-day moving average is currently at 1,515.
The bullish divergence between the CDNX, gold and the TSX Gold Index since early December (the CDNX is up 5% while gold is off 8% and the Gold Index is down 18%) has convinced us over the past couple of months that the next big move in commodities is up, not down, and that the Venture is ultimately headed to between 1,950 and 2,350. Indeed, gold is showing much improved technical strength at the moment (commercial traders have also substantially reduced their net short positions) and appears to be on the verge of a significant breakout which will occur on a move through $1,130. The buillish falling wedge pattern in gold is not good news for bears, and neither is the fact that gold’s important 30-day moving average is close to ending its recent decline. And as our most reliable indicator, the CDNX seems to be telling us that gold will likely challenge its early December, 2009, all-time high of $1,225 very soon, probably next month.
Crude oil and other commodities have gained new strength as well, again a development telegraphed by the action in the CDNX.
Bottom line: We’re anticipating a very strong CDNX over the next month at least, propelled by higher gold and silver prices and a strong overall commodities market.
The BullMarketRun Portfolio – A Strong Week
Gold Bullion Development Corporation (GBB, TSX-V)
We’ve been following Gold Bullion very closely over the past couple of months and initiated coverage on this stock at 7 cents around mid-December…the gain since then is 57% with GBB closing Friday at 11 cents on strong volume of nearly 700,000 shares…both the technicals and the fundamentals with GBB are incredibly bullish…we do not make this statement lightly – based on drill results to date as well as historical information, Gold Bullion in our view is sitting on a potentially very large (multi-million ounce) open-pit, bulk tonnage deposit at its Granada Gold Property 40 miles to the west of Osisko’s massive Canadian Malartic Deposit…assay results on 19 of 25 holes drilled at Granada in December and January are still pending…mineralization is open in all directions and keep in mind the company has explored less than 10% of its 2 x 7 kilometre land package…the shallowness of the mineralization at Granada is both impressive and unusual for this region…we’ll be analyzing Gold Bullion in much more detail following the release of the next set of assays which could come at any point now…
Seafield Resources (SFF, TSX-V)
Major accumulation continues in Seafield which jumped 3.5 cents Friday on a whopping 2.2 million shares…the stock was up 5 cents on the week…the house positions are interesting and we’ll be commenting more about that in the coming week…the kind of accumulation we’ve seen in Seafield is telling us that this stock is ultimately headed much higher as we’ve been predicting all along (we initiated coverage on Seafield last summer at 6 cents)…we believe the company is close to announcing its Colombian property acquisitions, though the delay on that has been frustrating…
Kent Exploration (KEX, TSX-V)
Kent showed strength this past week as well, jumping 2 cents to 17…with drill programs underway soon at Gnaweeda in Australia and Alexander River in New Zealand, we have every reason to believe Kent will climb back into the ’20’s very soon and quite possibly stage the breakout that we have been anticipating…this is an extremely well-run junior resource company with a busy agenda but a clear focus…Kent’s current market cap is only $6.3 million, offering plenty of upside potential…a turnaround in the stock’s 20-day moving average should occur by the end of this coming week, signaling a new uptrend…March should be a solid month for this stock…
Greencastle Resources (VGN, TSX-V)
Greencastle was up a penny on the week to 16 cents but on fairly light volume on less than 100,000 shares each day…Greencastle and its partners recently started testing the first of two wells that were drilled at Cabri in southwestern Saskatchewan, so news from there should be coming fairly soon…this is one of those stocks to simply tuck away and be patient with…Greencastle has much going for it, including promising gold properties in Nevada as well as monthly cash flow from its Primate oil royalties, and we believe the land package it has assembled in southwestern Saskatchewan could very easily result in the discovery of several or even numerous small producing oil wells with total production of 1,000 or more bpd…
Richfield Ventures (RVC, TSX-V)
Richfield enjoyed a big week, climbing 42 cents to $1.53…the company recently announced it’ll be starting a 25,000 metre drill program at its Blackwater Project in the Interior of British Columbia in early April…we have stated the case here repeatedly that Blackwater is shaping up as a world class bulk tonnage deposit with potentially several million ounces…a lot of the cheap Richfield private placement stock that became free trading in mid-January and drove down Richfield’s share price has now been absorbed by the market…any pullback in Richfield this coming week should be viewed as a buying opportunity as we anticipate this stock could make a massive move this spring…we’ll have more on Richfield very soon…
Colombian Mines Corporation (CMJ, TSX-V)
Colombian Mines, which we first recommend at 60 cents in early December, jumped another 11 cents this past week to $1.08…the company has a tremendous portfolio of exploration projects in Colombia and has also announced plans for a private placement financing at 95 cents with a warrant to raise approximately $3 million (we believe this will be over-subscribed)…for those who have not yet jumped in on CMJ, we do view the $1.00 level as a very attractive entry point…
