John: Friday, Cadillac Mining (CQX, TSX-V) opened at its low of 24 cents and closed at its high of 25 cents on low CDNX volume of only 92,000 shares. It was up 1 penny for the day and down 3.5 cents for the week.
Looking at the 3-month daily chart, we see how on November 25 CQX started a very orderly advance from a base of 7 cents to a high of 50 cents on January 4. The move up on Jan. 4 from the resistance level of 42 cents to 50 cents was a false breakout or bull fake. Since then the stock has retraced down to find support at 24 cents.
The last 5 trading sessions are of particular importance. The candles for Monday, Tuesday and Wednesday are all dojis – indecision, typical of trading action at the end of a retracement. Then on Thursday, another bottom sign, the candle is a hammer with the close right on the support at 24 cents. Friday’s trading, although light, was bullish, with a small white candle. Another important point is that 24 cents coincides with the Fibonacci 50% retracement level which also provides support. Indeed, this very much looks like a bottom.
The EMA(10) moving average provides close support for uptrend trading and is resistance for retracement or downtrend moves. The bullish sign we look for in a reversal is a close above the EMA(10) with much higher volume and a white candle the following day on high volume for confirmation of the reversal. There are two resistance levels shown (blue horizontal lines) at 32 cents and 42 cents.
Looking at the indicators:
The RSI overbought condition in December has been completely unwound. The RSI declined all of January but has now turned up and is at 38% – bullish.
The Chaikin Money Flow (CMF) indicator shows how the stock has been under selling pressure for most of January but this has started to ease during the last 3 trading sessions. The CMF is at – 0.141.
The ADX trend indicator has the -DI (red line) at 27 and above the +DI (green line). Both are flat. The ADX trend strength (black line) indicator is also flat at 29. This is a typical orientation at the end of a retracement.
Outlook: There is a strong case for CQX to be at the bottom of a retracement, so good news should move the stock to the upside rather quickly.
Note: The writer holds a position in Cadillac Mining.
Cqx just have one problem, no cash and they are missing a good opportunity for raise a PP.
Too risky!
Comment by Marc — February 6, 2011 @ 8:33 am
Good to hear an update, I got in pretty late an bought most of mine at 0.38-0-43cad. So this correction has hurt pretty much, but sittin tight still and waiting for news from wasamac and other. Have Cadillac said anything about a drillprogram yet or do we know nothing about when they will start? And which of their land packages do you think they will start with? Is an intervue with them a possibility in near future? Thanks – J.C.
Comment by J.C. — February 6, 2011 @ 8:40 am
Things should really come into focus with Cadillac here in February, I believe. Three things to watch for: 1) We expect Richmont will be releasing a new (and significantly expanded) resource estimate for Wasamac within the next week or two. Wasamac has the potential to become their #1 Gold producer. Cadillac will be looking at the new drill results and resource estimate closely to determine a course of action. I believe they will initiate some sort of exploration activity at their Wasa claims in order to further test the potential of this ground. Their natural partner with this property is Richmont – a deal between the two would make sense. Not sure if that will happen, CQX can always go it alone for now; 2) Visible Gold has announced a very aggressive drill campaign for 2011, and this will include their Cadillac Break venture with CQX. During my recent visit to Rouyn I met with Visible Gold President and CEO Martin Dallaire. His team is very excited about the deal with CQX. It’s my belief, and this makes perfect sense, that they will initially focus on the claims beside Vantex’s Galloway Project. It appears mineralization there trends onto Cadillac’s land; 3) Utah Goldstrike Project – more information should be coming out regarding this as CQX reviews historical data. I absolutely love this project – Cadillac has astutely tied up an entire former mining camp where significant production of gold and silver took place in the late 80’s/early 90’s. The market hasn’t caught on yet to how big this could become, but that’s ok – it will in due course. Those who understand the opportunity now will benefit the most down the road. An interview with Cadillac President and CEO Victor Erickson makes sense sometime this month.
Comment by Jon - BMR — February 6, 2011 @ 9:38 am