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BMR’s technical analyst confirms tonight what we were suggesting this morning – a new uptrend is underway with Gold Bullion Development (GBB, TSX-V).  The improved technical outlook comes on the heels of a 6-session slide – concurrent with a strong downward move by the CDNX – that wiped 39% off Gold Bullion’s market cap after the stock hit a new all-time high of 71 cents June 25 (interestingly, this compared to a very sudden and similarly quick 31% drop by Osisko in 2005 shortly after it hit a new all-time high of 80 cents – 3 months later Osisko was over $1.50).

John has an updated GBB chart and analysis below.  Over the weekend we’ll also examine the fundamental factors that we believe could drive Gold Bullion to much higher levels over the summer:

The chart and indicators both suggest there is a good probability GBB will move up on higher volume next week.

John: After slumping from a high of 71 cents on June 25 to a low of 43.5 cents just 6 trading days later, Gold Bullion Development has been consolidating with declining volume over the last 3 sessions.  Investors were in a buying mood today but only to clean up the weak shares to 50 cents to create a typical launching pad for a possible decisive move to the upside next week.

Looking at the chart we see that the SMA(50) is providing strong support and with today’s trading the downside risk from here is minimal.  The next resistance level appears to be at 55 cents but this should be weak.

Looking at the indicators:

The RSI has developed a “W” formation just above the oversold region and thus appears ready to move up – bullish.

The Slow Stochastics %K (black line) has climbed out of the oversold region to the 23% level and the %D (red line) is falling, so by Tuesday or Wednesday of next week we could see the %K crossing above the %D and GBB making a move up.  This is mainly contingent on increased volume (preferably >2 million shares per day) and the price of Gold not going into serious decline.

The Chaikin Money Flow Indicator (CMF) is green, above the zero level which shows there was some buying pressure even though the stock suffered a significant decline.  This is bullish.

Outlook: The chart and indicators tell me there is a good probability that GBB will move up on higher volume next week.

Gold Bullion Development (GBB, TSX-V) has completed, in our view, a healthy and normal correction that took the stock from a high of 71 cents June 25, when it was clearly technically overbought as we had warned, to a low of 43.5 cents early this week.  As of 10:15 am Pacific time, GBB is ahead 1.5 cents on the day at 49.5 cents.  It has stayed above its opening price of 48 cents almost the entire trading session and has been as high as 50 cents. Technically, the stock is showing renewed signs of bullishness.

Interestingly, the pullback in Gold Bullion was almost identical in magnitude to the sharp and quick correction experienced by Osisko (OSK, TSX) in September, 2005, after it ran from the low 30’s to an all-time high of 80 cents.  Osisko retreated 30% to 55 cents and just three months later it was over $1.50.

Like with Osisko, the drill bit will be the driving factor in GBB’s stock price as the summer wears on.  Based on all of our due diligence, which has included two extensive on-site visits in addition to exhaustive research of current and historical publicly available information regarding the Granada Gold Property, we have every reason to believe significant new discoveries are on way in the LONG Bars Zone as Gold Bullion attempts to define a multi-million ounce open-pit deposit.

We will have more on Gold Bullion over the weekend.

Gold is showing some strength this morning…as of 7:50 am Pacific time, Gold is up $10 an ounce to $1,209 after yesterday’s dip below $1,190…the CDNX, which seems to have found good support at 1345, is up 10 points to 1363 this morning and appears poised for a rally (if it hasn’t already hit bottom) as our technical analyst suggested the other day…Gold Bullion Development (GBB, TSX-V) is firmer this morning, ahead half a penny to 48.5 cents…down 30% from its high less than 2 weeks ago, NOW is clearly the time to be aggressive again with this stock just like when Osisko pulled back 30% from an 80 cent high in September, 2005…the LONG Bars Zone with its multi-million ounce potential has far too much going for it for Gold Bullion to remain at 50 cents much longer…based on the 100+ page 1994 Granada Eastern Extension report we obtained from the Quebec Ministry of Mines, we have every reason to believe Gold Bullion is going to make a series of significant discoveries east of the Preliminary Block Model in Phase 2 drilling and in additional drilling after that…we’ll be reporting more on Gold Bullion over the weekend with an updated chart and our thoughts regarding the potential magnitude of the LONG Bars Zone…Gold Bullion became technically overbought a couple of weeks ago at 70 cents but that overbought condition has now cleansed itself, paving the way for a fresh move to the upside…Richfield Ventures (RVC, TSX-V) is looking stronger these days and found important support at 90 cents recently…RVC is ahead 4 pennies to $1.10 this morning…like Gold Bullion, Richfield is attempting to define a world class bulk tonnage deposit at its Blackwater Project in central British Columbia…we prefer Gold Bullion’s location (Quebec) but Blackwater has a lot going for it…keep a close eye on Richfield along with North Arrow Minerals (NAR, TSX-V) which should be drilling its Lac de Gras diamond property by next month…North Arrow has been in a tight range between 15 and 18 cents for the past month…

Gold got as high as $1,209 overnight but has reversed to the downside…as of 7:45 am Pacific time, Gold is off $15 an ounce to $1,189…Gold continues to be supported by rising 30, 60, 100 and 200-day moving averages but further immediate downside risk clearly exists as some technical damage has occurred over the last week…the CDNX is flat at 1361…Gold Bullion Development (GBB, TSX-V) traded nearly 1.2 million shares in the first half hour this morning with a range of 48.5 to 54 cents…despite the drop from a high of 71 cents to a low of 43.5 cents over 7 trading sessions, Gold Bullion’s rising 20-day SMA remains intact (though it has flattened out) as it has since its big move began March 1…the rising 50-day SMA at 48 cents is also providing very strong support…fundamentally, as we have stated many times here before, the possibility of a multi-million ounce discovery in the LONG Bars Zone is very real…our site visit last month and the information we obtained from the Quebec Ministry of Mines on the Granada Eastern Extension (including maps that clearly outline the strike of the rock for several kilometres) confirmed in our view the incredible blue sky potential of the LONG Bars Zone particularly going east…while the nearly 40% pullback in the stock price was frightening to some, our view is that this was a normal and healthy correction within an ongoing bull market in this stock – in otherwords, a great accumulation opportunity…the drill bit of course will ultimately dictate where GBB is going but at 50 cents the upside potential certainly exceeds the downside risk…Seafield Resources (SFF, TSX-V) is unchanged at 18 cents…we’ll be posting an updated chart on SFF later today and BMR has also confirmed an interview with President and CEO Tony Roodenburg next Wednesday…it’s not often that Roodenburg grants interviews so we look forward to the opportunity…

Gold fell as low as $1,184 overnight but has rebounded to $1,193 as of 7:05 am Pacific time, down just $1 on the day…after slipping 69 points the last 3 sessions, the CDNX is trying to find its footing…the Venture is up 2 points to 1349 after 35 minutes of trading this morning…in each year between 2003 and 2007, the CDNX briefly fell below its rising 300-day moving average (which it has now) and then rebounded strongly as the bull market continued…we’ll see if history repeats itself here in 2010…Seafield Resources (SFF, TSX-V) is holding an investor conference call starting at 8 am Pacific time (11 am eastern) with Ian Park as moderator…this should prove very interesting as investors get additional information on Seafield’s Colombian holdings as well as other projects…Seafield is currently down half a penny at 18 cents… Gold Bullion Development (GBB, TSX-V) is off 1.5 cents to 48 cents…GBB recovered yesterday after dipping as low as 43.5 cents where there is exceptionally strong techncial support…the intensity of the sell-off in GBB recently has been surprising considering the fundamentals haven’t changed at all…investors are still waiting for the first batch of drill results from Granada…those results can never come quickly enough and many investors can often become impatient or concerned…some selling of stock to exercise warrants at 16 cents is also likely occurring…but the bottom line here has not changed…the LONG Bars Zone is massive and holds real potential for a multi-million ounce, near-surface deposit…the drill bit will dictate where this stock is headed and we’re very confident the LONG Bars Zone will deliver the goods…investors need to keep a close eye this month on North Arrow Minerals (NAR, TSX-V) which is making preparations to start drilling its very promissing Lac de Gras diamond property…the stock has shown strong support at 15 cents where the upside potential far exceeds the downside risk…nothing new to report on Sidon International Resources (SD, TSX) which is quiet at 5.5 cents…the company is still waiting for approval from the CDNX on a series of recently filed documents including its letter of intent to acquire the Morogoro east Gold Property in Tanzania…

The CDNX has likely not yet hit bottom but there are signs of a rally on the horizon as John explains in this Wednesday pre-market CDNX chart update:

John: The bears were feasting on the CDNX again yesterday, sending the Index lower by nearly 9 points after a modest early advance.  The CDNX has been hit hard in recent days by both the general weakness in all North American markets and the slide in the price of Gold from above $1,260 to below $1,200.  However, as we will see from the chart and the indicators there is a glimmer of hope in the near future.

Looking at the 9-month daily chart of the CDNX we see the Symmetrical Triangle (sloping blue lines) that was drawn on a previous chart and the target (horizontal blue line) where we expected to see resistance to the decline.  The bears were too strong, however, and the Index continued to drop.  I have drawn a resistance band (horizontal green lines) starting at 1347.  The Index reached this band at the end of yesterday’s trading.  This appears to be a source of strong support going back to October, 2009.

I have also drawn the EMA(20) and as you can see, the Index has moved a long way from the EMA (exponential moving average) and when this occurs the market will usually attempt to lessen that distance with a rally.  We saw this happen in May when the CDNX fell to around 1,400.

Looking at the indicators:

The RSI(7) is deep in the oversold region at 13.39 – this is almost at an extreme level.  Probably bearish for the immediate future but the relative strength should soon begin to increase.

The Slow Stochastics has the %K (black line) at 4.35 and flat, and the %D (red line) at 12.74 and plunging further down in the oversold area.  Probably bearish in the immediate future but could rally quite soon.

The ADX trend indicator has the -DI (red line) above the +DI (black line) and the ADX trend strength (black line) is pointing up and increasing, indicating the bearish trend is getting stronger.  However, we see that the -DI is rather high, over 50, and is pointing down.  It’s possible this has reached a peak and is about to move lower.  This could give us the first sign that the bulls are providing support and that there will either be a consolidation around these levels or a rally similar to the one in May.

Outlook: There will likely be more bearish movement in the CDNX over the next day or two but it appears we can soon expect a rally or consolidation.  Watch the -DI indicator carefully as it may give the first sign of a turnaround.

Gold is off sharply this morning but the bleeding on the CDNX has stopped, at least for now, as the Venture is up 4 points to 1361 as of 8 am Pacific time in sympathy with significant gains in New York and Toronto…the CDNX has fallen below its rising 300-day moving average which it did every year during the 2003-2007 climb, so we continue to view this as a normal correction within an ongoing bull market…Gold has slipped $18 an ounce to $1,191, a 6-week low, and has clearly suffered some technical damage which likely means more weakness ahead…an astonishing development over the last week has been the extent of the slide in Gold Bullion Development (GBB, TSX-V)…we did state GBB was in overbought territory in the upper 60’s and a pullback was expected, but a drop from 70 to 45 cents over 6 sessions meant some investors were pushing the panic button and throwing GBB overboard for no logical reasons…with regard to Gold Bullion we’ve always stated here it’s important to keep an eye on what Jordan Capital is doing…from June 28 through yesterday, Jordan sold but 15,000 shares and bought 224,000…Jordan was first on the scene with Gold Bullion – they handled the financing at 7 cents last December – and they remain as bullish as ever on this play as we do here here at BMR…investors are still waiting for initial drill results from Granada but everyone should remember it took 2 and a half months from the start of Phase 1 drilling before the first big batch of results (including GR-10-17) came in…some 16-cent warrants expire July 10, so this is no doubt contributing to some of Gold Bullion’s current weakness…the stock is trading huge volume today (over 3 million shares in the first 1.5 hours) and is currently down another 1.5 cents  to 46 cents…Gold Bullion does have very strong technical support in the low to mid-40’s…an interesting development with Seafield Resources (SFF, TSX-V)…the company has arranged a conference call for 11 am eastern time tomorrow with Ian Park as moderator…it’s clear Seafield wants to get the message out just how undervalued its Colombian assets are…Seafield is down half a penny to 17.5 cents…Kent Exploration has increased its financing from $600,000 to $900,000, a very positive sign…at 11 cents and with a much healthier balance sheet, Kent represents outstanding value for long-term investors…Fire River Gold (FAU, TSX-V) is up 2 pennies at 58 cents this morning and has held up extremely well through this market weakness…

BullMarketRun.com extends best wishes to its Canadian readers for a joyful and safe CANADA Day today!  The BMR crew is taking advantage of this slow market period (no trading July 1 in Canada, no trading July 5 in the U.S. for Independence Day) by taking several days of well deserved rest.

Barring any major market developments, the next BMR posting will be Tuesday morning, July 6, prior to market open (Morning Musings will not appear Friday or Monday, nor will our regular Week In Review feature).  We appreciate your understanding.  BMR will be back in full force next Tuesday morning!