John: Adventure Gold (AGE, TSX-V) is an aggressive 3-year old junior exploration company with a strong portfolio of properties in Quebec and Ontario. It has a very bullish chart and is trading in all-time high territory around 40 cents (AGE was added to the BMR Portfolio October 28 at 34 cents). On Friday, Adventure Gold opened at 39.5 cents, rose to a high of 40.5 cents and then closed at 38.5 cents to remain unchanged on CDNX volume of 393,000 shares. The 6-month daily chart below is an update from that presented on October 27, a date noted by the vertical thin blue line:
The breakout to the upside from the bullish downsloping flag occurred on October 25 and continued for 5 days to reach a new high of 43 cents on October 29. Since then there has been a 5-day consolidation, forming a pennant which in this case is a bullish continuation pattern. A pennant can have 2 outcomes: (1) the stock continues the consolidation and forms a flag or (2) it stages a breakout. Because this is part of an upside move the breakout probability is to the upside.
Strong support is shown at the 31 cent level (horizontal green line). Except for November 3 the volume has been decreasing since October 28, validating the consolidation of the pennant. The high volume on November 3 was due to a large share cross (which in itself can be a bullish sign) and not regular trading.
Looking at the indicators:
The RSI is flat at 63% – plenty of room to move up without being overbought – bullish.
The Chaikin Money Flow indicator (CMF) shows a high degree of buying pressure over the last 3 trading days and also shows an increase each successive day. Of particular note is that this occurred during a consolidation period with relatively low trading volumes. The CMF level for Friday was 0.401. – very bullish.
The ADX trend indicator has the +DI (green line) above the -DI (red line) at 34 and 12, respectively, and the ADX (black line) trend strength indicator is high and flat at 45. This is a very bullish orientation.
Outlook: The strength of the trend and the increased buying pressure point to a near-term breakout to the upside from the pennant.
AGE aquired a small piece of land adjacent to Gold Bullion in late september 2010, and its stock has gone up almost by %100 in the past 39 days since the announcement of this purchase and yet, Gold Bullion’s share is still in $0.50s and has been for the past few months. Am I missing something? what the ….. is going on here?
Comment by automobile — November 7, 2010 @ 10:29 pm
Yes, you are missing something….by getting into Granada (albeit it’s a small parcel of land but in strategic areas) AGE was able to draw some more attention to it….and because of that investors have discovered that this is a solid little exploration company that has plenty to offer and was very undervalued in the low 20’s when the Granada announcement was made…..AGE has much more than just Granada….that is what has happened here….Granada provided the spark…..more eyes are on the stock….
Comment by Jon - BMR — November 8, 2010 @ 5:42 am
Frankly Jon , I haven’t seen anything to believe that AGE has something substantial except a small parcel of land like you mentioned above in Granada which is absolutely nothing compare to what GBB holds in that area.
Comment by automobile — November 8, 2010 @ 6:18 pm