CEO.CA Weekly Wrap
A look at some of the week’s best chats and charts on CEO.CA, a community and platform for Canada’s venture stock markets.
Last week saw precious metals mining stocks wobble a bit early in the week, only to end the week strong with a 3%-4% rally across the sector on Friday. Gold in US Dollar terms found support near $1280 and finished the week back at exactly $1300. While silver similarly found support at US$15 per ounce and ended the week with a ~2% rally.
Last week’s moves in precious metals were particularly notable because the US Dollar Index rose nearly 1% and it’s not common to see metals put in place a formidable low at the same that the US dollar is powering higher:
USD Index (Weekly)
We will have to see if last week was actually an inflection point for the dollar or if there will be more strength above ~97.50 in the USD Index ahead.
The TSX-Venture Composite put in place what could be yet another higher low as it bounced on Friday along with the juniors:
TSX-Venture Composite (Daily)
Turning to last week’s market action it was an eventful one in the Canadian small cap space with many big moves in individual names. I’ll begin with what for me was the most interesting trade of the week:
At Monday’s close shares of Amex Exploration (TSX-V:AMX) had fallen for 5 consecutive trading sessions and the stock had retraced roughly 50% of its big breakout move from $.20 to a high of $1.52 on February 26th. In addition, AMX had also filled in an open gap from February 12th at $.86.
This created an intriguing trade setup on Tuesday morning which ended up working out beautifully soon after the company released an NR updating investors on its drilling plans over the coming months and also pointing out they had intersected more visible gold:
The following video of CEO.ca Pro Market Depth helps to illustrate the price and volume action between Monday March 4th and Wednesday March 6th:
Beginning at about the :35 mark in the video you can see the price action after the NR was released by the company shortly after the market open. A very large bid shows up at the $.97 level and buyers jump in front of that bid, then the same thing happens on Wednesday except the large bids show up at $1.07 and then at $1.15. AMX shares closed at $.85 on Monday the 4th and proceeded to gain more than 50% over the next two trading days, closing at $1.28 on Wednesday the 6th. I have a feeling I know who at least one of the big buyers on the 5th and 6th was and his initials are ES…
Ah, buying at $.97 on the 5th! I guessed correctly.
CEO.ca Pro Market Depth was indispensable to me last week in trading AMX shares. I was able to follow the trading action in real time and identify the large bid support when it came in early in Tuesday’s session. It’s safe to say I made more in that single trade last week than the cost of an entire year of a CEO.ca Pro subscription.
Live Blogging PDAC
Last week was PDAC week and the world’s largest mining conference received a lot of attention on CEO.ca. @MiningBookGuy in particular took it upon himself to generate a ton of content and fill in the CEO.ca audience on what he was learning at the conference.
@MiningBookGuy (CEO.ca’s king of hashtags) liveblogged 2 major events at #PDAC. The first one was the #Tethyan Belt Session on March 3. He provided great coverage of the session including posting a lot of the slides.
For anyone interested in #africa, on March 5 @MiningBookGuy attended the #africanminingbreakfast at PDAC and posted a lot of information about #BurkinaFaso, #Sudan, #Rwanda, #Guinea and #Ethiopia:
@MiningBookGuy (his name is Nick by the way) first caught my attention in 2016 with a video on Sarama Resources (TSX-V:SWA). Sarama Resources is a West African gold explorer and developer focused on establishing a new mining district in Burkina Faso.
In that video Nick made a valid case for why Sarama was cheaper than many of its peers, including a less advanced Burkina Faso explorer called Nexus Gold (TSX-V:NXS). It turns out he was right about NXS being over-valued (the stock has dropped more than 90% since early 2017), however, SWA has also had a couple of tough years in 2017 and 2018. Something changed in November 2018 and Nick laid out the case for SWA again in January 2019 in this video:
SWA shares have more than doubled since MBG’s January 28th video calling for a re-rate and last week we saw the most impressive volume and price action in Sarama shares in a long time:
Things got really interesting on Wednesday morning around the :19 mark in the following CEO.ca Pro Market Depth video:
After seeing a large iceberg sell order at $.075 suppress the price action for several days the seller was finally finished on the morning of Wednesday March 6th and the share price took off to the tune of ~50% over the next couple of days.
I have had a core position in Sarama for a while and I added to it a few times last week. A double from Friday’s close over the coming months is a reasonable upside objective in my estimation, and the $.075-$.10 area should offer solid support.
Golden Triangle Rally
Turning back to Canada and more specifically the Golden Triangle, we have seen an interesting trend higher in many Golden Triangle explorers over the last several weeks. I have chosen to highlight a few that I follow:
While all of these charts are a bit different, 3 out of 4 made an important low in December 2018 and all four are well off of their 2019 lows, and at/or near highs for 2019. Is this the smart money getting in ahead of the summer drilling run-up that we typically see between March and June?
The standard Golden Triangle script (which seems to repeat almost every year) is a steady move higher between March and July followed by some profit taking ahead of drill results, then there is usually at least one big burst higher on drill results between August and October, followed by the roundtrip back to base camp which typically takes place between October and December, then we do all it again next year. I’m going to bet on a different scenario this year, and it seems that a different sequence of events is already unfolding.
Happy Birthday Dad
I’d like to finish this week’s Weekly Wrap by acknowledging my father who would have been 89 today (he passed away in May 2017 at the age of 87). He was an inventor, a businessman, and an investor (among many other things). Later in his life he caught the gold and junior mining bug, fortunately for him this happened around the 2002-2003 time frame just as the sector was emerging from a multi-year bear market. He caught the bug as the sector took off and rode it through the roller coaster ride of the next decade before falling ill around 2011 and drastically reducing his portfolio.
Overall he did quite well as an investor but not without some painful lessons along the way, including the October 2008 junior mining meltdown (from July 2008 to October 2008 the TSX-Venture Composite suffered a ~70% drop, its worst in history over a 3-month time period) which put him in the hospital. Those lessons were painful for me and my family to watch, and I resolved to never put myself in a situation in which my mental/physical health would be that affected by market volatility. A valuable lesson that probably would have taken much longer to learn without experiencing it through my father.
TSX-V Composite (April - December 2008)
What had worked so well during the bull market years (2003-2007) turned terribly wrong in the brutal bear market year of 2008. He became too enamored with company’s stories and fell in love with too many stocks.
Never ever fall in love with a stock. I have had to remind myself of this recently as it can be easy to slip into the spell of a great story with plenty of pie in the sky.
It’s safe to say I wouldn’t be involved in the junior mining sector or even in the stock market without my father’s influence. Thank you for your guidance, your unconditional love, and for always believing in me Dad. You are missed dearly and fondly remembered every day. I love you.
Disclosure: Author owns shares in ABN.V, BNCH.V, GTT.V, and SWA.V at time of publishing and depending upon market conditions may buy or sell at any time without notice. Aben Resources (ABN.V) is also an Energy & Gold sponsor company.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.