John: At BMR we consider the CDNX to be our “engine”. It has been in a long-term uptrend since the end of 2008 and that uptrend continues. Minor pullbacks, like we’re seeing now, have proven to be excellent buying opportunities. Our objective with this technical analysis is to determine what the Index is doing now and what we can expect in the near future. Yesterday the CDNX opened at 2423 and fell throughout the day to close near its low at 2386. It was down 38 points (-1.57%) on a normal volume day. As of 7:05 am Pacific today, the CDNX is off 15 more points at 2371.
Looking at the 3-month daily chart, we see that over the 3-month period the Index has climbed steadily but with several corrective phases. The SMA(50) moving average, which provides tremendous technical support, is almost a straight upsloping line indicating steady average growth and the EMA(20) indicates the low points of the corrective phases. Note there are just 2 cases where a daily close has occurred below the moving average and both times it has reversed the following day. Monday was a down day and so was yesterday with the close almost sitting on the EMA(20). If today is a down day, as it appears it could be, the Index will close below the moving average.
There are two divergencies shown between the RSI and the Index. The first was from January 1 to Jan. 19 followed by a 4-session down move. The second was from February 18 to March 7 followed by yesterday’s down trading. Thus, if we are to have a repeat of the previous divergence response we may have a few more down sessions. The bullish overall uptrend remains intact.
Looking at the indicators:
The RSI is at 54% and pointing down. The horizontal orange line represents a previous support level at 45%. Thus there is room for the RSI to fall further before reaching support.
The Slow Stochastics (SS) has the %K (black line) at 70%, pointing down and below the %D (red line) at 77% and flat. A high crossover occurred in the last 2 days as shown by the thin vertical blue line. Similar high crossovers occurred on Jan. 19 and Feb. 18 and were followed by 5 and 4 sessions respectively before the %K reversed. The low crossovers are indicated on the chart. Thus the SS indicator shows the probability of a few more down days before we get another low crossover.
The Chaikin Money Flow (CMF) shows the buying pressure is low at the moment. I expect it to remain low until the SS produces a low crossover.
Outlook: The chart patterns and indicators all point to a few days of potential weakness before the CDNX resumes its upward climb. Based on previous patterns we should see a reversal to the upside within a few trading days.
Hello BMR!
Have you got an answer when ABI is going to start dewatering the mines?? Some shareholder had spoken to mr Hinse on the telefone and he said that would be relesed in a nr, have you heard something about that??
Comment by Carl — March 9, 2011 @ 7:23 am
I’m checking sources but I don’t have an answer yet. My gut feeling is that yes, they are going ahead with dewatering the mine as this was the plan earlier………they want to get Elder back into production by next year sometime.
Comment by Jon - BMR — March 9, 2011 @ 7:28 am
Good day, a while back you mentioned something regarding Encanto Potash on your site, I beleive you were refering about another analyst. He was recomending the stock. Since Is aw it on your site, EPO has fallen more than 50%. Have you any comments on EPO? Where do you think it is going in terms of share price? And what are the prospects for this company. Also, anything new on the VGN front? The 1st quarter is coming to a close and we have yet to see the nre all time highs for the stock as you suggested we would see in the 1st quarter.
Thanks and have a Blessed Ash Wednesday.
Johnny2barrels
Comment by john — March 9, 2011 @ 7:29 am
Hello Jon
I think mr Hinse has to got the story out in the open, today hardly no one knows about ABI and their assets, if you ask me I think the stock should be at least at the 0,50 cad, whats your opinion about that?
Comment by Carl — March 9, 2011 @ 7:36 am
So looks like many jumped ship with SD. What’s ur insite on that and should i be grabbing a life jacket and cking the water temp?
Comment by nikolay — March 9, 2011 @ 7:55 am
GQC has a new presentation on its’ website. Very well done. New for me was the fact that Barrick is one of their big shareholders. Also mentioned large institutional interest. Perhaps the ABX holdings were common knowledge. If anyone know how much and when the shares were acquired I would appreciate your sharing that info.
Comment by george wohanka — March 9, 2011 @ 8:33 am
Abcourt has impressive assets. They have a gold mine they could potentially put into production as early as next year, and one of the best silver deposits in the country at Abcourt-Barvue. Accumulation of this stock since December shows that some investors have certainly caught on to what this company holds and its intrinsic value. To me, 18 cents and a market cap of $20 million for what Abcourt has is ridiculous. It’s almost like the Abcourt-Barvue Property is not part of the valuation.
Comment by Jon - BMR — March 9, 2011 @ 9:57 am
Read my comments last night in response to Andrea’s post. There’s a lot of fear in the market right now and if you look at SD on the charts, you’ll see it has become very oversold. When the herd is going in one direction, it’s often wise to go in the other. Having said that, a bounce in SD will run into some technical resistance over the near-term at 9 or 10 cents.
Comment by Jon - BMR — March 9, 2011 @ 10:00 am
John, we just pointed out that potash plays at the time were very hot, and that Encanto was one stock that Clive Maund had just written up. We didn’t offer our own opinion on it. I’m not a potash expert. Looking at it on the charts, it is in oversold territory and could potentially test its rising 200-day SMA at 28 cents.
Comment by Jon - BMR — March 9, 2011 @ 10:04 am
About GQC and what’s new to me, Barrick as a large shareholder.
I am also interested to hear more details about that if anyone have more information?
Btw, could we see the new 43-101 for La Escandalosa in March?
Comment by Johan — March 9, 2011 @ 12:53 pm
John, actually the exact wording is even a bit more interesting. Not just a big shareholder but, “Biggest shareholders: GoldFields & Barrick Gold.”
So far I have not found a filing, if there is one. Biggest indicates a filing trigger may have been tripped but does not mean one has actually been tripped.
Comment by george wohanka — March 9, 2011 @ 1:20 pm
Johnny2barrels, I recall reading a comment in February in which the contributor stated that IR at EPO had personally advised him that the news release on the resource estimate was delayed because the resource was so big and the sp would go to $1 or words to that affect. When I see anything like that I laugh and walk away. Ultimately, this was another news release that had a lengthy delay and when it arrived was not what was expected (the resource estimate is being recalculated using different models) and consequently the sell off. No idea if it’s a buy, the current price is inviting and they do have or are negotiating a tie in with an oil producer – Sentinel Rock (SNT.V).
Comment by Andrew — March 9, 2011 @ 1:49 pm
Jon, do you think SFF will test it’s 200 – day SMA at 29 cents? There was lighter volume today and more asks than bids. I wonder if this means that the panic sellers have thinned out and the buyers are waiting for another opportunity? I read up on the Anglo history at Dos Quebradas and it looks like they have 1.7m ounces with 800,000 being on Seafield’s DQ property. The second rig for Santa Sofia is not drilling yet!
Comment by Andrew — March 9, 2011 @ 2:00 pm