RE: RE: RE: Casey's ResearchHere you Etiennesteve, note the ending no longer own GBB, I wonder how many they bought today?
John: On Friday, Gold Bullion Development (GBB, TSX-V) opened at 53 cents, touched a low of 52 cents, climbed to 54 cents and then closed unchanged for the day at 53 cents on CDNX volume of 954,000 shares. We’ve seen the same range this morning through the first three-and-a-half hours of trading (as of9:50 am Pacific).
Looking at the 6-month daily chart we see that after the sell-off on February 15, GBB has had 9 volatile sessions followed by 3 sessions of narrow trading between 52 cents and 54 cents. Trading stability has returned. Another important observation is that trading is below both the SMA(50) and SMA(100) moving averages, thus they are now lines of resistance for future upside moves. The SMA(50) is pointing down and there’s also a band of resistance (2 horizontal blue lines) between 69 cents and 77 cents. There is proven strong support (horizontal green line) at the 52 cent level. The SMA(300), not shown here, is at 50 cents.
At the moment trading is confined to the narrow channel because there are investors just waiting to absorb the selling between 52 and 54 cents. They are investors rather than traders because I doubt if this will move significantly to the upside in the immediate future. Thus, for the near-term, GBB is expected to continue to form a horizontal trend channel and a base for future moves to the upside.
Look at the left hand side of the chart. There we see that a downtrend occurred in September. After the 2-day reversal on Sept. 20 and 21, a month-long channel was formed which was a solid base for the surge in November and December. I believe we can expect a similar scenario here. How long it will be before the next breakout to the upside, there is no way to tell. However, given that Gold Bullion’s LONG Bars Zone continues to deliver good results and still shows multi-million ounce potential, more excitement with this play is highly likely. The downside risk from current levels appears to be very limited.
Looking at the indicators:
The RSI(5) is recovering from the shock of the sell-off and is now at the 37% level, out of the oversold zone.
The Slow Stochastics(SS) is still heavily oversold and probably will stay that way for a while. One of the first bullish signs to watch for would be the %K (black line) breaking above the 20% level.
The Chaikin Money Flow (CMF) indicator is at -0.167, showing the selling pressure continues.
Outlook: I expect trading to remain within a horizontal trend channel for at least the near future as shown. This will be the base for potential upside moves later on.
Note: The writer does not hold a position in Gold Bullion Development.