John: Today, Gold Bullion Development Corp. (GBB, TSX-V) opened at 50 cents, its low for the day, climbed to a high of 54 cents, then closed at 51 cents – up 1 penny for the day – on total CDNX volume of 1.5 million shares. The volume today was almost twice that of Wednesday’s yet the share price never dropped below 50 cents, indicating there are plenty of buyers around to engage the sellers. Please examine the updated chart carefully, and you can read my analysis below it:
Looking at the 9-month weekly chart, we see that GBB is trading in an 8-week symmetrical triangle, a consolidation period. The consolidation is mainly caused by the lack of drill results and the absorption of some of the April financing shares which became available for trading August 9. There was concern among some investors that these shares would cause heavy selling with a resulting serious drop in the share price. That just hasn’t happened, however. The stock has been under pressure at times but has held up well, all things considered.
In a previous symmetrical triangle consolidation from mid-January to the end of February, we see that in the 7th week it broke to the upside and in one week went from 10.5 cents to 23 cents on drill results, a massive move. More drill results are on the way which offers the potential for another big move to the upside. It truly is a waiting game, one that strains everyone’s patience. The rewards, though, could be very satisfying. Granada has consistently delivered good news this year.
After the breakout in March, GBB climbed in an upsloping channel for the next 16 weeks, reaching a high of 71 cents on June 23.
Both the SMA(40) and the SMA(10) weekly moving averages provide support and are pointing up in a bullish trend orientation.
Looking at the indicators:
We see that the RSI was in the overbought region for the whole climb in the upsloping channel and dropped down at the beginning of the consolidation. The RSI is almost flat at 59% and is bullish, above the 50% level.
The Chaikin Money Flow (CMF) indicator shows that at the moment there is only slight buying pressure. Investors are waiting to snap up loose shares in the low 50’s. This is to be expected in this situation – bullish.
The ADX trend indicator has the ADX trend strength (black line) high at 58% above the +DI (green line) which is above the -DI (red line) in flat orientation, showing a strong bullish trend.
Outlook: GBB‘s chart remains very positive and shows that the stock is in an area of very strong support. The fundamentals are in place and haven’t changed. The company has given investors plenty of clues in the last two news releases that drilling is going well and that the eastern extension is growing significantly.
Thank you for the update, BMR. I have failed to notice that the previous jump in price had been preceded by a symmetrical triangle, and that we are currently in another said triangle.
Comment by Muiz — August 19, 2010 @ 7:38 pm
Interesting chart as always. Patience is a huge part of this game and those who are patient will be well rewarded by the next and subsequent results. A good 300 mt hole and some nice grades from long bar zone 1 should be enough to get us comfortably over $1. After that there is still loads of blue sky and this period of frustration will be just a dim memory.
Comment by patrick — August 20, 2010 @ 12:47 pm