The CDNX
As predicted, the CDNX is off to a flying start this month, advancing 84 points or 5.5% to 1,605 the first trading week of 2010. The Venture Exchange is now on a 10-session winning streak and volume is strong, too. This market has clearly entered an explosive new phase that should take it to the 2,000 level sometime during the first quarter – conceivably, even by the end of January if gold and commodities in general really start to go on a tear. That would be a massive one-month jump but not without precedent.
In a market like this, it’s important to “keep your head” and not let emotion force you into a mistake. Yes, it’s a great time to be aggressive. But don’t be chasing stocks, carefully and patiently look for the right entry points, and always stay liquid and have available cash at your disposal to take advantage of the “perfect” opportunity (a major discovery, for example) that may unexpectedly come your way. Try to always buy on weakness (on pullbacks that are against the primary trend), sell into strength and don’t get greedy. Easier said than done. Emotion is your enemy as an investor and a trader. Always remember that.
The Venture Exchange in December was “telegraphing” the end of gold’s correction and the start of another move up, so it wasn’t surprising to see gold gain strength this past week to close at $1,138.00. We fully expect that gold will head higher this coming week, perhaps sharply higher, buoyed by strong technicals including a reversal in its important 14-day moving average. The TSX Gold Index is still at heavily oversold levels based on Stochastics – we have all the makings here of an imminent and very significant upside move.
BullMarketRun.com Portfolio – A Superb Week!
Seafield Resources (SFF, TSX-V)
Seafield was our best performer of the week, jumping 50% to a new 52-week high of 30 cents. Seafield is now ahead 300% after we first initiated coverage on this stock last summer, and we still consider this to be a great hold with more gains – perhaps very substantial – down the road. As we stated Friday, though, traders may wish to lock in profits in anticipation of a minor pullback in Seafield this coming week. The stock is currently technically overbought, based on RSI and Stochastics – it is at levels on both those indicators where it has retreated from before. We expect Seafield will consolidate its recent gains in the week ahead, perhaps providing traders with an attractive re-entry point. Investors are still waiting for details on Seafield’s Colombian gold property acquisitions. We also wouldn’t be surprised if the company arranges a brokered financing in the not-too-distant future to raise additional funds – they have cashed themselves up pretty good over the past few months but we anticipate they will need 10 to 15 million dollars in total to make the impact we would like to see them make in Colombia (this will mean raising an additional $5 million, at least, plus the exercise of warrants). Strong support at 24 cents.
Gold Bullion Development Corporation (GBB, TSX-V)
Gold Bullion had a strong week (up 22%) and hit a new 52-week high of 12 cents. It closed at 11 cents on Friday. This stock is up 47% since we initiated coverage just a few weeks ago. We are not in Gold Bullion, however, for a mere 50% gain. We generally don’t like to speculate on drill results. However, based on historical records, the geology of the area they are drilling, and the company’s news release December 29, we have a very strong hunch that Gold Bullion has an excellent chance of a major exploration breakthrough at its Granada Gold Property along the famous “Cadillac Fault” near Rouyn, Quebec. We’ve gone into detail on this in recent articles. This is a must-own stock at current levels with very limited downside risk and huge upside potential. Strong support at 10 cents.
Colombian Mines Corporation (CMJ, TSX-V)
Colombian Mines had a stellar week, jumping 27% and hitting a new 52-week high of $1.15 before closing Friday at 95 cents. This stock is now ahead 58% since we initiated coverage just over a month ago. This company has a tremendous portfolio of exploration projects in Colombia that it has obtained through the direct acquisition process, and they should be announcing the start of drilling at their Yarumalito Property very soon. This is a tightly-held stock with strong management who are very knowledgeable about Colombia. Still plenty of upside to go in CMJ, we believe, and any pullback should be viewed as an excellent buying opportunity. Strong support at 90 cents.
Kent Exploration (KEX, TSX-V)
We continue to view Kent as a terrific long-term hold. When it breaks out in a huge way, we’re not exactly sure. Kent’s focus in coming weeks and months will be on its attractive package of Australian and New Zealand gold properties. We’re still waiting for assays from the drill program last October at Kent’s Flagstaff Property in Washington state, so the fact we haven’t seen those assays yet tells us they probably aren’t good which is a disappointment. However, Kent is no one-trick pony and its Alexander Gold Project in New Zealand should more than make up for any disappointments from Flagstaff. Kent is also working with Teck on the highly prospective Gnaweeda Gold Project in Australia. With a market cap of only about $6 million, Kent is extremely attractive. The stock is ahead 25% since we initiated coverage last October, and gained 11% this past week after closing Friday at 20 cents. Strong support at the 50-day moving average of 18 cents, and secondary support at the 100-day moving average of 15 cents.
Richfield Ventures (RVC, TSX-V)
Richfield rocketed to a new 52-week high of $1.95 this past week, after the release of encouraging assay results from its Blackwater Project in the Interior of British Colombia, then it promptly and strangely went into reverse to finish the week up just a penny at $1.33 (some cheap private placement stock, 3.3 million shares at 12 cents and 2.8 million flow-through shares at 17 cents, comes free trading this coming week which may help explain the fall, and a new drill program is still a little ways off in the distance). The bottom line, however, is that Richfield is sitting on a world class bulk tonnage deposit that conceivably could be in the order of several million ounces of gold. This is clearly a buy on any additional weakness. We initiated coverage on Richfield at $1.20 last month. Strong support at the 50-day moving average of $1.20, and secondary support at the 100-day moving average of $1.05.
