John: Today, Gold Bullion Development (GBB, TSX-V) opened at 53 cents, fell to a low of 52 cents and then climbed and closed at its high of 55 cents. It gained 2 pennies on CDNX volume of 1.7 million shares. A bullish day and a welcome sight after GBB plummeted from a high of 77 cents Tuesday following the release of new assay results from Granada. Jon is working on an article covering the fundamentals which should be reassuring to many. Tonight, let’s see what the Gold Bullion chart is telling us after the events of the past three days.
Looking at the 6-month daily chart, we see that up until Tuesday the price was forming a bullish ascending triangle bounded by the top blue horizontal line and the green sloping line. This triangle is a bullish continuation pattern and the expectation was that an attempt would be made within a few days for the price to break above the 77 cent resistance. Tuesday’s trading brought an abrupt end to these expectations as the stock started to fall soon after the opening bell when news hit the market suddenly (GBB’s timing and management of this release was poor in our view). Later in the afternoon we saw the stock bounce up from the 53 cent level to close at 59 cents.
On Wednesday the selling continued and the price fell throughout the day to a low of 52 cents and a close of 53 cents. With the strong shaved white candle today, however, the bulls have staged an effective counter-attack to wrestle control back from the bears. A base is being formed with a strong support band between 52 and 53 cents. This support band coincides with previous pivot supports in August and September. The blue Fibonacci set shows the retracement resistance levels are at 62 cents (38.2%), 65 cents (50%) and 68 cents (61.8%). Notice how well these levels coincide with the chart resistance levels.
Looking at the indicators: The RSI(5) is oversold and at 20%, pointing up and thus trying to reverse – bullish.
The Slow Stochastics has the %K (black line) at 14%, pointing down and below the %D (red line) at 35% which is also pointing down. No sign of a reversal here because the period level is 14 days.
The On Balance Volume (OBV) indicator shows that at the start of the decline on Tuesday the OBV (black line) was in concert with the SMA-20 (purple line), thus it gave no indication that a decline was imminent. Look for the OBV to turn up once a solid base has been formed.
Outlook: Trading today was the first sign of stability in the market and also a positive sign for a solid base and the start of a recovery.
Note: The writer holds a position in Gold Bullion Development.
So do you believe GBB could climb back to 0.75+ without any news then? I have no idea why there was as much selling on news as it was, because I believe they were good. But it happened, so the question is if we will trade between 0.50-0.60 for some time or if a fairly quick recover is possible..? Thanks – J.C.
Comment by J.C. — February 17, 2011 @ 6:02 pm
There was no reason for GBB to retrace if you base the NR on the results. Results were really good with continued decent grade on long intercepts with some shorter high grade intercepts as well. This thing is just getting bigger and bigger. One day when investors see the magnitude of this deposit, then you will see a true SP rise. Castle Mine drilling wasn’t mentioned at all in the latest release. I suspect drilling must be started by now as I believe the drill has been on site for a couple of weeks already.
Hi Jon, do you expect to have the interview with Victor Erickson of CQX this week? Also GQC made a small gain on increased volume towards the end of the day Thursday. This one could really take off if they hit on a step out.
Regards, Dan
Comment by Dan — February 17, 2011 @ 7:01 pm
Hi J.C.
You stated
“So do you believe GBB could climb back to 0.75+ without any news then? ”
The stock has just made it’s first step towards a recovery today. There will be news along the way I am sure and I feel that with the potential of the property it will fully recover but exactly how long I, like everyone else, do not know, it would be foolish to guess.
The point here J.C. I FULLY BELIEVE IT WILL RECOVER, that is the important message.
We will have to wait and see.
Comment by John - BMR — February 17, 2011 @ 7:08 pm
Hi Jon,
You mentioned ((GBB’s timing and management of this release was poor in our view ). How
could they have done otherwise? Looking at the timing…(news release and stock
plummeting, I do not thing anyone read the news.
Also, are you going to comment on the actual results?
Cheers always!
Paul
Comment by Paul — February 17, 2011 @ 8:32 pm
thx for the technical update guys – appreciated. no technical damage done it seems… this is good… and it really does seem that the ‘traders’ rather than the ‘investors’ took the stock down just because. anyone who thinks the results suck is misguided… almost 300 meters????
as somsone said on another board somewhere the easy stuff has all been found.. 1-3 g/ton will be considered really good from now on…
patience will be rewarded
Comment by Jeremy — February 17, 2011 @ 8:53 pm
Paul, I think the point regarding timing/management is because there was so much in terms of results for the market to digest, it likely would have been better had GBB been able to put news out after the market close and then arranged for Frank to be interviewed immediately for interpretation. That is the very important communication part of the mining exploration business. John did the chart tonight and I’m working on an article regarding results and potential which will be completed for early next week. We’ve already commented a little bit on results. I think there are some very good results and I’ll try to bring out some things that may not have been so obvious in the release.
Comment by Jon - BMR — February 17, 2011 @ 8:57 pm