5:35 am Pacific
Once each week at BMR, our technical analyst highlights a junior resource stock (outside the BMR Portfolio) that shows very favorable chart patterns. Investors/traders of course should perform their own due diligence, as always, and carefully review fundamental factors as well. This weekly feature is merely meant to introduce some possible opportunities that readers may wish to investigate. This morning, John takes a look at Canasia Industries Corporation (CAJ, TSX-V) which is now drilling its Clone Gold Project near Stewart, British Columbia:
John: Today, “Technically Speaking” takes a look at Canasia Industries Corporation (CAJ, TSX-V) which in March of this year announced it had received the first set of grades from the processing of its 10 tonne bulk sample sent in from the Clone Gold Prospect in the Stewart Gold District of BC. The results from this portion averaged 152.34 grams (or 3.87 ounces) per tonne gold. The Clone Gold Prospect recently returned grades including 12.8 metres of 44.75 g/t including 4.87 metres of 76.8 g/t (announced October 22, 2009). Then, in late August, a more aggressive follow-up drill program was announced and a drill rig for the Clone Prospect was moved to the property. On Sept. 2 the company announced the drilling had started.
This morning, Canasia reported that it has been informed by the operator that the first 4 holes have been completed at Clone. Visible gold was encountered in all 4 holes which have all been sent out for assaying.
The Clone Gold Prospect is Canasia’s flagship property and this drilling on the Clone will be the first since last year’s program that returned the grades mentioned above. Canasia has a diversified portfolio of 7 prospects including the Clone. On Friday CAJ traded in a narrow range of 18 to 19 cents, closing at 19 cents on CDNX volume of 2 million shares. Canasia’s shares traded up to 41 cents last year on more than 250 million shares which correlated with last season’s Clone drill program.
Looking at the 1-year weekly chart we see that CAJ has climbed from a closing low of 8 cents in June to its close on Friday at 19 cents. This climb has been orderly and formed an upsloping channel (blue line is resistance and the green line is support). The weekly SMA(10) provides strong support and is pointing up. There are 2 sets of Fibonacci levels shown. The right hand set shows the Seed Wave was from 8 cents to 16 cents and projects the next target to be 21 cents. The left hand set shows that after the 21 cent target has been reached, the following target will be 29 cents. The closing high for 2009 was 33 cents (horizontal blue line), thus the 29 cent Fibonacci target and the 33 cent high form a resistance band as shown. The average weekly volume has been increasing since early July when this upsloping channel started. This is very bullish.
Looking at the indicators:
The RSI is in the overbought region at 78%, but this is of no concern. Remember the weekly RSI for GBB was continuously in the O/B for 4 months during its move in an upsloping channel. There is still room for price movement before the RSI reaches an extreme level. If the price remains in the channel the RSI(7) will not reach an extreme level.
The ADX trend indicator has the +DI (green line) rising and above the declining -DI (red line). The ADX (black line), the trend strength indicator, is low at 24 and climbing. This is a very bullish orientation.
The Chaikin Money Flow (CMF) has been in the green since the beginning of July and shows the buying pressure is increasing. At present it is at 0.38 which is very bullish.
Outlook: CAJ is moving up steadily. With the drill program in progress, and volume and buying pressure both increasing, this stock has a good opportunity for a strong move.
