Everton Resources (EVR, TSX-V) is a company we’ve been mentioning occasionally in recent months and readers may recall an interview we did with President and CEO Andre Audet November 26. Everton has pulled back slightly since then and yesterday closed at 31.5 cents as it successfully tested its rising 100-day moving average.
Everton’s focus is on its large property holdings in the Dominican Republic where aggressive drilling continues. This is clearly a situation that should be watched closely and we encourage investors to do as much due diligence on EVR as possible (there is news out as EVR this morning as well regarding its partner’s plans to spend $3.6 million on exploration at the company’s Opinaca-Wildcat Property in the James Bay area near Goldcorp’s Eleonore Project). The EVR chart looks attractive as John explains below:
John: Yesterday, Everton Resources (EVR,TSX-V) opened at 29.5 cents and dropped as low as 29 cents before climbing and closing at its high of 31.5 cents for a gain of half a penny on low CDNX volume of just 88,000 shares.
Looking at the 6-month daily chart we see that on November 8 the price broke to the upside from a month-long horizontal trend channel between 26 cents and 28 cents. This started a climb to 34 cents from where in 3 sessions it declined to a low of 28.5 cents, only to renew its move to the upside to a high of 39.5 cents on Nov. 29 on an exhaustion volume of nearly 1.3 million shares. At that point a top consolidation horizontal trend channel formed between the 34 and 39 cent levels for 17 sessions. This was validated by declining average daily volume. On Nov. 23 the price broke to the downside and proceeded to decline to yesterday’s low of 29 cents.
There are two sets of Fibonacci levels shown. The blue set shows the span of the seed wave from 25 cents to 33 cents and the first extrapolated target at the 161.8% level was at 38 cents. Note that this was equal to the highest close value.
The green set with 0% at 25 cents and 100% at 38 cents shows the next target level is 46 cents (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci level based on technical analysis). Also note that the low of 29 cents yesterday coincides with the 50% level of the blue set, thus we can count on 29 cents being a very strong support level.
The trading during the last 3 days is a bullish “engulfing” pattern. This is a very strong bullish reversal pattern and could signal a reversal of the price decline. However, volume must increase to confirm this reversal.
Also shown are 2 important moving averages, the EMA(20) and the SMA(100). The EMA-20 (green line) provides close support during extended upside moves as shown between Nov. 8 and December 20. When the EMA-20 begins to decline, or when the price should close below this moving average, a stock will typically come under pressure. The SMA-100 (purple line) provides support of a different kind. It provided close support for the horizontal trend channel from October 13 to Nov. 8 and again it’s providing close support as the stock bounced off this level yesterday.
Looking at the Indicators: The RSI is low and pointing up at the 42% level. Considering yesterday’s bullish candle, this is a very positive sign.
The Slow Stochastics has formed a very bullish “W” formation with the %K (black line) pointing up and has crossed above the %D (red line) at 12% – very bullish.
The Chaikin Money Flow (CMF) indicator is at zero, showing there is neither buying or selling pressure of any significance.
Outlook: EVR’s chart patterns and indicators project a very bullish scenario but any significant price increase is going to require a considerable increase in volume (disclosure note – I do not currently hold a position in EVR, Jon does).
