RE: RE: BuyingThanks, Zad!
I have increased my position from 75,000 shares to 100,000 shares, and will continue to add if it goes any lower.
I think the bottom will be somewhere between $.51-56.
The bottom in the TSX-V should be around 2180 (see below).
Guy
January 6, 2011
Some unexpected and very nice Christmas gifts have arrived more than aweek late but that’s perfectly okay. There’s no need to blame CanadaPost. In this case you can actually thank certain investors who havebeen extremely generous as these gifts take the form of junior resourcestocks that are being offered at significantly discounted prices after a100-point drop in the CDNX since Tuesday.
The CDNX has declined from a high of 2312 Tuesday,the first trading day of the year, to a low of 2212 today- a drop ofnearly 5% during a three-day period. If the CDNX werea grocery store, and prices were slashed 5% across the board, you’d seesome very happy customers. So now is not a time to flinch and getscared – now is the ideal time, as it was in November as well as lastsummer, to embrace this weakness and load up the basket with someserious bargain-hunting.
John updates the CDNX chart for us and sees many reasons to view this pullback in a very bullish context:
Today the CDNX opened at 2267, its high, thendrifted lower during the day to a low of 2212 before closing at 2217for a loss of 45 points (2.0%) on volume of 410 million shares.
Looking at the 1-month daily chart we see that the Index continuedits down move that started 2 days ago from its high of 2312. This is aloss of nearly 100 points in just 3 days, but let us put this in properperspective. First of all, there was a warning that the Index wastemporarily topping out. The CDNX rose on December 29,30 and 31 but on each consecutive day the volume declined (the increaseon the 31st was the 10th consecutive winning session). This is anegative divergence. To sustain any uptrend an increase in volume isrequired. The volume increased on January 4 but on this day the bearswere out in force so this was mainly down volume. It isimportant to note that the volume during the last 3 days (down days)has been pre-holiday average and constant, showing clearly that this isa correction and not a sell-off.
So, why a correction at this time you may ask? Well, this can beexplained by looking at the RSI which was overbought and peaked on Dec31, and by the very high value of the +DI of the ADX trend indicator.The last move up by the CDNX started on December 16 and lasted for 10 full sessions and took the Index from around 2100 to 2312.
The Fibonacci levels (blue) show that the retracementsupport levels are at 2203 (50%) and 2178 (61.8%) with the latter beingparticularly strong.
Looking at the indicators:
The RSI is unwinding from its overbought situation and is approachinga previous support level (orange horizontal line) which is between 55%and 60%.
The Chaikin Money Flow (CMF) indicator shows buying support hasdecreased during the last 3 days. Buyers are sitting back andaccumulating cheap shares of sound companies.
The ADX trend indicator shows that the +DI (green line) had reachedan unsustainable level of above 60 and is now down to the 49 level. TheADX (black line) trend strength indicator is steady and high at 50,showing the uptrend is still strong. The +DI, -DI and ADX lines are inbullish orientation.
Outlook: This minor correction is not expected to fall below the 2178 Fibonacci support level shown on the chart.