John: Yesterday, Seafield Resources (SFF, TSX-V) opened down at 53 cents, dropped a penny lower to 52 cents and then recovered to close at its high of 56 cents for a loss of 1 penny on CDNX volume of 1.8 million shares. This morning, as of 7:30 am Pacific, SFF is off 2 pennies at 54 cents. The Seafield chart looks very strong as explained below.
Looking at the 2 month daily chart, we see that during the month of December SFF has experienced extreme volatility. On Dec. 3, Seafield gapped up at the open to 35 cents and during the day rose to a high of 77 cents before closing at 57 cents (total CDNX volume of a whopping 71 million shares) for a gain of 34 cents thanks to a spectacular drill result from its Miraflores Property in Colombia.
In the 9 subsequent sessions, Seafield has found strong support at the Fibonacci 50% level (blue set). During this period the average volume has consistently declined, validating the period as a consolidation. The EMA(20) (exponential moving average) is climbing rapidly to provide bullish support and now sits at 45 cents. Note that on Dec. 2, the day prior to the big move up, the price was sitting right on this moving average.
The green set of Fibonacci levels shows the next target to be $1.05 (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci target based on technical analysis as a guide for investors).
Looking at the indicators: The RSI is declining at the 65% level and unwinding from the overbought condition due to the big move to the upside.
The Slow Stochastics has both the %K (black line) and the %D (red line) pointing down at 65% and 69%, respectively. This is typical for a stock in consolidation.
The Chaikin Money Flow (CMF) indicator shows that although the buying pressure is not bullish at the moment, it is increasing.
Outlook: This stock is consolidating and has shown that the 55 cent level can provide strong support. The fundamentals are very strong and the technicals are providing a solid base for future upside moves.
Note: The writer does not hold a position in SFF.
Awesome John.. thx.. I have been told by techy’s that the gaps ‘always’ have to be filled, meaning that coming back to 25 is always out there.. fundamentally with the assets that seem to be present that doesn’t make any logical sense.. technicals, fundamentals, and common sense never seem to agree:) what is your take on ‘filling the gap’ with juniors like SFF?? as always mate thx for your insights.
Comment by Jeremy — December 17, 2010 @ 7:41 am
That’s a good question Jeremy and one that perplexes me also in relation to pennies and juniors – any opinions appreciated.
Herb
Comment by Herb — December 17, 2010 @ 7:43 am
Thank you for your comments Jeremy and Herb.
There are several types of gaps. SFF had a “breakaway gap” which I doubt will ever be filled. If that gap had been just a few cents I would expect it to be filled after such a long consolidation period but this was enormous and backed by very strong fundamentals. Then there are continuation gaps which occur during a run-up or decline often these are not filled.
Then we get the exhaustion gap, the blow off at the end of a run-up often ending in a black candle. These are always filled. Hope this helps.
Have a Very Merry Christmas.
Comment by John - BMR — December 17, 2010 @ 8:04 am
Cheers – and a happy Christmas to you guys, you have certainly help pay for mine! 🙂
Comment by Herb — December 17, 2010 @ 8:08 am
Thx John.. appreciated.. more learning to do!!… now I know why I dont like black:) love green:)
Happy CHristmas to you and your families John and Jon.. your undeniable desire to help, advise, and support us plebes out here is very much appreciated.. you guys do good!!:)
Comment by Jeremy — December 17, 2010 @ 11:20 am
John,You recently mentioned that you liked Troymet Exploration(TYE) since it has prospective land near Richfield’s Blackwater deposit so I went to their website,made some calls and began my own due diligence. Afterwards I couldn’t get to the phone fast enough to call my broker.The more I read about Troymet I honestly thought there had to be some kind of catch since what I saw seemed too good to be true for any company with those kinds of projects to be priced so low. I called the company which told me they will be drilling adjacent to Blackwater within a month.Also HudBay Minerals will finally in a couple of months begin drilling Troymet’s McClarty Lake claims within the Flin Flon-Snow Lake greenstone belt where they previously intersected 4.17 g/t gold and 8.48 g/t silver over 4 metres (got this off the website).Last year neither Troymet nor HudBay was able to drill McClarty Lake due to poor warm weather conditions but this year is more than ideal according to the company.Then there’s Troymet’s advanced drill-ready Golden Eagle project in the southern end of the Yukon which to me looks like it could be a company-maker by itself.How/why has TYE flown under the radar screen for so long? I have subscribed to several newsletter services(Casey,Dines,Kaiser,Coffin Brothers HRA,Mining Speculator etc.)for quite some time and never have seen TYE mentioned by anyone until you brought it to my attention.The results of the soil sampling and IP surveys are soon to be released on TYE’s 5 target areas on the Key property .Then the drills apparently will begin turning soon thereafter.Can you imagine what would happen to Troymet if it’s discovered that the source of the mineralization at Blackwater lies on Troymet’s Key property? As we say here in the south… We will all be in high cotton for sure! Anyway,thanks for the heads-up about TYE and all the other outstanding companies you continue to bring to our attention.Sincerely,Thomas O. Thomasville GA
Comment by Thomas — December 18, 2010 @ 3:34 pm