Acadian Mining Corporation ADAIF

last week's action in ADA

[maldoror]

Lat week's action in ADA was very illuminating in several ways. First. We try to interpret the market action through technical analysis. ADA opened up higher after the announcement of drilling results but the stock closed below its opening price and at the low for the day, indicating that the bulls were able to drive the stock higher intraday but could not hold onto the gains. In candlestick analysis this formation is called an inverted hammer which forms after adecline. It indicates that the current down trend could be due for a reversal. There has been a resurgence in the bullish camp, but not yet a reversal.It is encouraging that the bulls were able to mount an intradayrally and therefore further developments should be monitored closely. The Chaikin Money Flow indicator is an oscillator that measures accumulation/buying pressure and distribution/selling pressure. ADA showed selling pressure/distribution on the day following the announcement based on the CMF indicator. The on balance volume indicator on a cumulative basis improved and therefore is considered positive. Sewveral other technicalindicators such as the Williams%R, the price oscillator (PPO) and the slow stochastic indicator turned positive as well and therefore the balance of the technical evidence indicates that a trend reversal is in process of being formed which suggests that one should accumulate long positions in ADA on any weakness in price. Second: On an intraday basis the major sellers were represented by Global Securities and Northern Securities. The first underwriting (I believe at 20 cents)was done by Global and the second underwriting at 27 cents was done by Northern. Both houses were given broker warrants as payment, which are in the money above 35 cents. The normal tendency is for underwriters is to sell their positions the moment they become profitable. From a professional trading point of view they most likely shorted stock as well especially Northern as they can deliver their underwrittens tock (27 cents cost) against their short position after March 29, 2004. Their actions are usually as transparent as aprostitures wedding gown. "Diaphanous is the appropriate word I believe. Based on our view of the potential of ADA over the next 6-9 months we try to classify their action. Penny wise? Yes -without any doubt Pound foolish? Yes-the future price will confirm it. As we mentioned befor,March 30, 2004 is the date on which participants in the last underwriting can trade their stock and some of the approx 12 million shares will be sold to take short term profits above 30 cents and this at the margin will present some additional resistance but it will also provide additional liquidity so we consider this extra supply essentially asmarket neutral and in time it will be a positive. Maldoror, your charming confidant and as always a penitent sinner.