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Sidon International Resources (SD, TSX-V) has indeed been another BMR “home run”, tripling in value from July 9 to July 21 after the CDNX approved its letter of intent regarding the Morogoro East Gold Property in Tanzania.  We’ve been writing about Sidon for a few months – we added the stock to the BMR Portfolio in March when it was sitting at just a nickel.  Tonight, BMR’s technical analyst updates the near-term outlook for Sidon:

John: Sidon had been trading in a consolidation channel from mid-May until early July.  Then on July 12, just before it received final approval from the CDNX on its letter of intent regarding the Morogoro East Gold Property in Tanzania, it broke out to trade at 7.5 cents.  Since that time Sidon has traded as high as 15.5 cents and closed Friday at 12 cents.

Looking at the 3-year weekly chart, we see a major resistance band (2 horizontal blue lines) based on previous highs during the June/July 2008 period.  This band is between 15 cents and 17.5 cents.  Sidon traded up to this resistance band last week but declined and began to consolidate.

Trading during the past 2 weeks, however, has broken through the long-term trend resistance (blue sloping line).  This line now becomes long-term support (resistance becomes support after it has been broken).

Looking at the indicators:

During the past 2 weeks there has been a tremendous increase in volume with over 50 million shares traded.  This demonstrates the need for a relatively large increase in volume to produce a substantial breakout.

The Fibonacci levels show support at 10 cents.  This also coincides with the previous long-term resistance line.

The RSI is high at 82%, in the overbought region, but has enough room for the trading to test last week’s high of 15.5 cents.

The Slow Stochastics has the %K (black line) above the %D (red line) and pointing up, thus still providing room for a further test of the high.

The Chaikin Money Flow indicator is bullish in that it shows accumulation but the buying pressure of last week was less than the week before.

Outlook: We may see a test of the 15.5 cent high this coming week but with such a large and fast advance, I expect Sidon needs to consolidate with a support base of 10 cents before being able to stage a successful move through resistance between 15 and 17.5 cents.

The BMR Portfolio

Gold Bullion Development (GBB, TSX-V)

Gold Bullion traded within a range of 46 to 53 cents this past week and closed Friday at 49 cents, a loss of just 1 penny on the week…it’s baffling to us that some investors have not yet picked up on the obvious clues in GBB’s July 13 news release that some very good assay results could be in the works for the east-northeast area of Granada based on geologists’ visual observations of the core…GBB is intersecting multiple zones of altered feldspar porphyry, with some quartz veining and even some visible gold in some holes, in all directions around Phase 1 discovery hole GR-10-17…in addition, GENIVAR is drilling at least twice as deep in Phase 2 in the east-northeast as they were in Phase 1 and they certainly wouldn’t be wasting time or money doing that unless visuals were confirming the necessity to do so…it appears, then, that mineralization is being encountered both near surface and at depth…assay results will tell the tale, and obviously it’s true that sometimes assays don’t confirm the visuals…but the bullish tone of Gold Bullion’s news release, and Frank Basa’s upbeat tone in our interview with him last Tuesday, suggest the company is very confident about how the Phase 2 program is proceeding…our belief, based on our exhaustive research on Granada in addition to 2 site visits, continues to be that the LONG Bars Zone holds excellent potential as a multi-million ounce low grade, open-pit deposit…the July 13 news release re-confirms that we’re on the right track with that analysis…obviously everyone is anxious to see assay results which will dictate the direction of this stock…at BMR we have complete faith that the Granada Gold Property is going to deliver the goods and if that means putting the reputation of our site on the line, so be it…Granada has given us no reason to be timid…

Seafield Resources (SFF, TSX-V)

Seafield was unchanged on the week at 16.5 cents…this is no time to get disappointed or frustrated in Seafield…the fundamentals with this company continue to be strong and do believe Seafield has a high probability of defining at least 2 million ounces at its Quinchia Project in Colombia by year-end…as SFF proves up ounces in the ground, its share price will increase accordingly…the company is currently drilling its Miraflores Property where it’s hoping to increase the 43-101 inferred resource there by approximately 25% to 1 million ounces…drilling at Dos Quebradas, which has a lot of blue sky potential, is expected to commence within the next 4 to 6 weeks…Chuscal is Seafield’s 3rd major target at Quinchia and it could turn out to be the best of the three based on early geophysical and geochemcial work…

Sidon International (SD, TSX-V)

Sidon, which we introduced to our readers at a nickel just four months ago, has been a star performer in the BMR Portfolio over the past couple of weeks, tripling in value after the company received approval from the CDNX on its letter of intent that gives it an option to purchase the highly prospective Morogoro East Gold Property in Tanzania…the CDNX also finally approved Sidon’s 5-cent private placment announced April 21…Sidon will soon have to raise more money to complete its obligations to acquire Morogoro East and begin exploring it, and we’re sure they will succeed in raising the capital they require…we’re very bullish on Morogoro which is in an under-explored region of Tanzania approximately 100 kilometres south of Canaco’s (CAN, TSX-V) Handeni Project which has garnered a lot of interest lately…Sidon is slowly unwinding its overbought technical condition…there’s strong support at 10 cents and resistance around 15 cents…the stock closed at 12 cents Friday, a 2-cent jump for the week on continued high volume…

Richfield Ventures (RVC, TSX-V)

Richfield has experienced 3 major corrections since last fall when it first announced a significant discovery at its Blackwater Gold Project in central British Columbia…each time the stock corrected sharply to 90 cents and then recovered…Richfield closed Friday at $1,30, a 5 cent drop on the week but a 44% jump from its 90 cent closing price July 5…technically, the stock is encountering strong resistance at its 200-day moving average of $1.35…a move through $1.35 would certainly be a bullish signal…we’re also waiting for a reversal in the stock’s 50-day moving average which has been in decline since May (that likely won’t happen until sometime next month)…fundamentally, Blackwater holds very strong potential as a world class bulk tonnage gold/copper deposit…as drilling intensifies through the rest of the summer (the pace has been rather slow since April when RVC’s 25,000 metre program began), interest in the stock should pick up accordingly…

North Arrow Minerals (NAR, TSX-V)

North Arrow has been firming up a little lately and closed Friday at 18 cents after a 17 cent close the previous week…volume is still very light but that should pick up considerably over the summer as events unfold with North Arrow, namely the expected start of its Las de Gras drill program in September and continued progress with its Beaverdam Lithium Project in North Carolina…given Gren Thomas’ spirit of adventure and fervor for grassroots exploration, we wouldn’t be surprised to see North Arrow add another property to its already large portfolio in the not-too-distant future…Thomas is determined to make things happen with this company which is a big reason we’re so bullish on North Arrow’s long-term prospects…

Colombian Mines Corporation (CMJ, TSX-V)

Colombian’s 50-day moving average has been in decline since May and it could be another month or more before that reverses…the stock is finding strong support at 60 cents, however, where it’s underpinned by a rising 300-day moving average…CMJ was down 3 cents on the week at 65 cents on low volume…we see a lot of long-term value in CMJ which has a very large and attractive land package in Colombia…one of its key projects is the Yarumalito Gold-Copper Property which is delvering encouraging drill results…investor enthusiasm for Colombian gold plays is not what it was last year but that could easily change…

Kent Exploration (KEX, TSX-V)

It seems pretty clear that Kent bottomed out at 10 cents but how quickly it recovers and moves higher is uncertain at this time…Kent finished the week at 12 cents, up a penny-and-a-half from the previous Friday…with a major financing at a dime, the company has finally posted a reclamation bond for its Flagstaff Barite Property in northeastern Washington State…hopefully Kent can get that project moving forward as quickly as possible as work there can only take place over the summer and early fall as winter conditions usually arrive by November…Kent is still waiting for a drill permit (this has been dragging on for months) for its Alexander River Gold Property in New Zealand…and the Gnaweeda Gold Project in Western Australia seems to be in a state of limbo at the moment after the Archean Star financing caved in and was delayed…for patient long-term investors, Kent offers good value with its various projects but there are clearly better opportunities in this market at the moment…

Greencastle Resources (VGN, TSX-V)

Insider trading reports show that Greencastle President and CEO Tony Roodenburg has purchased 341,000 VGN shares in the open market since June 17…that accounts for about 35% of the total trading volume in the stock during that time…it’s not surprising Roodenburg is scooping up shares…Greencastle is trading at cash value and history shows the stock is always a great buy whenever that occurs…an event always seems to eventually come along and drive the stock higher…Greencastle finished at 12 cents this past week, a drop of half a cent from the previous week…for patient investors with a 6 to 12-month time horizon, Greencastle is a relatively safe investment at current levels with much more upside potential than downside risk…Greencastle’s monthly royalties from the Primate oil field in Saskatchewan are approximately $120,000…

CDNX and Gold

The CDNX enjoyed a good week and finished ahead 16 points to close at 1395 on increased volume which is important.  The CDNX has some resistance to overcome, right at 1395 and again around 1450, but we’re seeing a lot of bullish signs which makes us believe this market could bust loose very soon.  As BMR’s technical analyst pointed out so effectively in an article Friday night, it appears highly likely the CDNX bottomed out at 1343 July 6.  If that’s indeed the case, the correction from May 1 totaled 345 points or 20.4% over 45 trading sessions – definitely in line with previous major CDNX pullbacks that occurred within an ongoing bull market each year from 2003 through 2007.  As we’ve mentioned and analyzed, the 2010 CDNX chart bears a striking resemblance to the one from 2004.  The market slid 25% from the spring high to the July (and yearly) low in 2004 before a very profitable 25% move to the upside over the next 5 months.  What’s particularly encouraging about the modest recovery in the CDNX since July 6 is the fact Gold has been under some pressure during that time.   The CDNX is like a “forward looking” machine and seems to be telling us Gold is going to strengthen again soon, probably starting sometime in August, and that in turn is also going to propel the CDNX higher.  In addition, the bullish signs we’re seeing in the CDNX do NOT jive with the crash (“sky is falling”) scenario that some fear-mongering pundits who haven’t yet recovered from 2008 are peddling to investors.  Based on historical patterns, there’s no way the CDNX (a very powerful leading indicator) would be behaving in the manner that it is right now if an across-the-board crash in all markets was just around the corner.  This market still has a lot of underlying strength and vibrancy to it with long-term rising moving averages (200-day and 300-day) that are in no danger of reversing right now.  The bullish case, in our view, is undisputable.  Gold continues to hold above its rising 200-day moving average and has tremendous technical support between $1,140 and $1,180, as demonstrated again this past week.  While some short-term technicals have weakened in Gold this month, the market is holding its own under that kind of pressure and also appears to be supported by physical buyers.  A period of seasonal strength in Gold begins by about mid-August.

On July 16, in the midst of a lot of fear in the markets, we posted one of our most important articles of the year:  “Hopeful Sign:  2010 CDNX Chart Looks Like Repeat of 2004″ (“A fascinating chart comparison between the CDNX in 2004 and 2010 suggests the weakness over the last 2-and-a-half months is drawing to a close and a strong market from August through the remainder of the year could be upon us.”)

Tonight, John (BMR’s technical analyst) reiterates his bullish position with an updated CDNX chart and analysis (“We have seen a powerful reversal in the Index“):

We have seen a powerful reversal in the Index with all chart patterns and indicators pointing to a continuance of this rally if the volume can overcome the resistance.

John: The Venture Exchange (CDNX) found a bottom early in July at the 1343 level, rallied for 6 days and then declined to 1354 on July 20 to test the previous bottom.  That was also the Reversal Day.  For the past 4 trading sessions the CDNX has demonstrated upside strength to end the week at a major resistance level.

Let us look at the chart and analyze what the CDNX has been doing in detail during the month of July to warrant the belief that the bottom has been reached.

On the chart I have shown the two low levels previously mentioned (horizontal green lines) which form a major support band.  Also shown are two major resistance levels (horizontal blue lines).

The low of 1343 occurred on July 5 and is shown on the chart and indicators by a thin blue vertical line.

Looking at the indicators on July 5: The RSI shows an inverted head and shoulders pattern (mauve circle) – yes, chart patterns can occur on indicators, and looking further we see the RSI increase immediately afterward by an expected amount.  This is a powerful reversal pattern.

The Slow Stochastics shows the %K (black line) crossing up over the %D (red line) at a very low level below 20%.  This is a powerful reversal signal.

The ADX trend indicator has the -DI (red line) peaking – this also is a powerful reversal sign.

What was needed was a rally and then a test of the low which occurred on July 20 to verify the low.  The Index rallied for 7 days, then declined for 3 days to form the second low.  Together, the chart and the indicators give a strong signal that a low for the CDNX was reached and tested.

Where does the Index stand at the close of today? As you can see from the chart, the close today is at a major resistance level.  For the present rally to continue, increasing volume is required to break this resistance.

The Bollinger Bands have both bands pointing up and the SMA-13 (blue dotted line) has turned upward – bullish.

The RSI has broken above the 50% level – bullish.

The Slow Stochastics %K (black line) has moved up over the %D (red line) with both heading up – bullish.

The ADX trend indicator has the -DI (red line) pointing down and the +DI (green line) pointing up.  The ADX trend strength black line has turned down, showing the downtrend is weakening – bullish.

The average volume has increased over the last 4 days and indicates a change of philosophy and psychology in the market – a very bullish sign.

Outlook: We have seen a powerful reversal in the Index with all chart patterns and indicators pointing to a continuance of this rally if the volume can overcome the resistance.  If not, we will probably see a period of consolidation but I believe the support will hold.  The next 2 weeks will be interesting.

Gold’s chopiness continues which is no surprise…Gold got as high as $1,205 this morning but has pulled back and as of 8 am Pacific time it’s trading at $1,192, down $3 on the day…we expect Gold to make a decisive turn to the upside but not until sometime in August as seasonal strength begins to take hold…technically, Gold’s long-term uptrend remains very much intact and huge support exists between $1,140 and $1,180…the action in the CDNX is very encouraging and is confirming our view that 2004-style move is possible August through December…the similarity between the 2004 and 2010 CDNX charts is remarkable and is one of many clues that suggests the crash scenario that some pundits are pushing simply doesn’t add up…the CDNX is currently ahead 4 points to 1392 after a 23-point move yesterday on strong volume…Gold Bullion Development (GBB, TSX-V) is ahead 1.5 cents to 50 cents after the first hour-and-a-half of trading…we have done exhaustive research on Gold Bullion in addition to two site visits which explains our bullishness on this stock…our “big picture” view on the situation is very simple – the LONG Bars Zone is everything it has been made out to be and then some…we know that puts the reputation of BMR on the line but that’s how confident we are in this project…Granada is going to deliver…the company signaled its bullishness on Phase 2 drilling, we believe, through the tone and content of last week’s news release…some interesting core photos have also been posted on the GBB web site…in the important east-northeast area, which gives Gold Bullion its blue sky potential, Phase 2 drilling is intersecting multiple altered zones of favorable rock east, west, north and south of Phase 1 discovery hole GR-10-17…they are also hitting some visible gold as confirmed in the news release…mineralization, it appears, is being encountered near surface and now at depth as Phase 2 drilling in that area is going twice as deep as Phase 1…Sidon International (SD, TSX-V) is up half a penny to 11 cents this morning on relatively low volume for Sidon, only 200,000 shares…from a technical standpoint, we’re waiting for Sidon to form a nice base and unwind its recently very overbought condition…the stock tripled in value over a very short period and will likely need a little more time to fully digest those gains…Seafield Resources (SFF, TSX-V) is off half a penny to 15.5 cents…we have no concerns regarding Seafield as the company is well positioned, fundamentally, to develop a potentially very attractive resource at its Quinchia Project in Colombia…going forward this stock will be driven by Seafield’s ability to add ounces at Quinchia and we have every confidence they will accomplish that…Richfield Ventures (RVC, TSX-V) is up 6 cents to $1.30…we remain very bullish on Richfield’s Blackwater Gold Project in central British Columbia…an important technical development for this stock would be a move above resistance at $1.35 which is the 200-day moving average…

Once each week on BMR, our technical analyst reviews an interesting  junior resource stock (outside the BMR Portfolio) in detail from a technical point of view.  Investors/traders of course should perform their own due diligence, as always, and consider fundamental factors as well.  This weekly feature is merely meant to introduce some possible opportunities that readers may wish to investigate.  Tonight, John takes a look at a company that made a huge run last month but recently has pulled back – Golden Hope Mines (GNH, TSX-V) which has promising gold and base metal properties in southern Quebec:

John: Golden Hope’s main project is located on a mineralized belt in southern Quebec that is mostly owned by the company and includes the Bellechasse (Timmins) gold deposit and other geological formations.  Drilling started in mid-April and by the end of June, 5,000 metres were completed and an additional 600 metres were drilled on the Beland anomoly 6.2 kilometres southwest of the Bellechasse (Timmins) deposit.  Assay results are expected shortly.  More drilling is in progress.

Looking at the chart we see that GNH has been trading in a downsloping channel for the past 17 days and Wednesday it broke down through its EMA-20 (exponential moving average) to a low of 53 cents and closed at 54 cents.  Today it opened up at 55 cents and climbed during the day, with the help of a bullish gold market,  to a high of 59 cents but pulled back and closed at the opening price of 55 cents.  The candle for the day is a Gravestone Doji which shows that the bulls were dominant during the day but later the bears overcame their strength and the stock finished where it began at 55 cents.  GNH is consolidating with average daily volume drifting lower (mauve sloping line) and like many other companies it’s waiting for drill results.

The Fibonacci levels are shown (green lines) with the 61.8% level at 52 cents, so expect the stock to find strong support around there.  The stock rocketed from a low of 16 cents near the end of May to a high of 74 cents near the end of June where it met resistance at its all-time high from early 2007.  GNH’s long-term moving averages are in bullish alignment, so after digesting its recent huge move over a very short period there is clearly the possibility of another assault on its all-time high and a potential breakout from there.

Looking at the indicators:

The RSI has formed an “M” formation (mauve circle) around the 50% level which is a bearish sign and is presently down at 43%.  Also shown is a previous “M” formation occurring at the end of April/early May, 2010, and a thin black line points to the resulting decline in price – bearish.

The Slow Stochastics has the %K (black line) breaking down over the %D (red line) – bearish.

The ADX trend indicator has the -DI (red line) above the +DI (green line) – slightly bearish – while the ADX trend strength indicator (black line) is low and flat indicating that the bearish trend is weak.

The average volume during the consolidation period, as previously stated, is declining as expected.

Outlook: GNH is likely to continue to consolidate until drill results are released (or draw very near) which means we can expect more softness in the immediate term.  The 52 cent Fibonacci level, however, should provide strong support.

Gold continues to hold up very well and is $11 higher at $1,197 as of 7:40 am Pacific time…the CDNX is up 12 points to 1377 with the Dow and the TSX also strong…the scenario we laid out last weekend regarding the CDNX (the comparison with the 2004 market) is very much intact, meaning the 1343 low July 6 may turn out to be the low for the year with a vibrant market very possible from August through December…that’s exactly how things played out in 2004 and the 2004 and 2010 charts are remarkably similar…Gold Bullion Development (GBB, TSX-V) is charging higher this morning, breaking through some minor resistance and moving above 50 cents again…GBB’s 10-day moving average has also swung positive, so the stock is regaining technical strength…GBB is up 3 pennies to 52 cents…Sidon International (SD, TSX-V) is taking a breather, as we suspected it would, after getting into heavily overbought territory at 15.5 cents yesterday…Sidon is off a penny this morning to 11 cents…BMR is travelling to Vancouver today for business and we’ll be reporting from there tomorrow…we have a very interesting interview in the works…

Gold has traded in a range of $1,187 to $1,199 this morning…as of 7:45 am Pacific time, Gold is unchanged at $1,192…the CDNX is up 5 points to 1369…after last week’s Gold Bullion news release and our interview yesterday with company President and CEO Frank Basa, BMR is convinced that GBB’s Phase 2 drill program is going to significantly expand mineralization not only near surface but at depth in the east-northeast Phase 1 discovery area of the LONG Bars Zone at the Granada Gold Property in northwestern Quebec…what is highly significant is that if indeed GENIVAR is finding mineralization at depth (150 to 300 vertical metres) in the east-northeast area, as both the news release and Basa suggested, there is a high probabality this will also occur within the Preliminary Block Model immediately to the west where essentially only shallow drilling (100 metres vertical or less) has ever taken place…it doesn’t take a rocket scientist to understand how the magnitude of this project appears to be growing and very significantly…Gold Bullion is in what we call the “sweet spot” for accumulation – there has been a normal pullback, very typical and similar to what Osisko (OSK, TSX) went through in its early days, with the long-term uptrend remaining firmly intact from a technical point of view…this sort of pullback can precede a massive breakout to the upside on huge volume…we have all the clues and signals that suggest Gold Bullion has something potentially massive on its hands in the LONG Bars Zone with a second LONG Bars Zone possible nearly 2 kilometres to the east of GR-10-17…if these two zones connect, then Granada will rival Canadian Malartic…Gold Bullion is currently up 2 pennies to 49 cents…Sidon International, which we added to the BMR Portfolio in March at a nickel, has tripled in value for us after reaching a high of 15.5 cents this morning…unlike Gold Bullion, however, Sidon is technically very overbought at the moment which doesn’t mean it can’t become more overbought but “chasing” Sidon right now is probably not a good idea…we also expect the company to be announcing another financing in the near future to really set the wheels in motion for Morogoro East…our outlook for Sidon for the remainder of the year, however, is very bullish as it begins to explore this highly prospective gold property which has many high grade showings and is also along the same belt as Canaco’s (CAN, TSX-V) Handeni Project…Sidon is up 1.5 cents to 14.5 cents on 3.5 million shares…Sidon and Gold Bullion (which we first introduced at just 7 cents) are classic examples of the home run opportunities we uncover at BullMarketRun…speaking of blue sky potential, we also urge investors to keep North Arrow Minerals (NAR, TSX-V) on their radar screens as we see a real chance for some geological fireworks out of this company come September when it begins drilling its Lac de Gras diamond property in the Northwest Territories…North Arrow is unchanged at 17 cents this morning…