Canadian junior index trends higher, suggests gains to come!

October 11. 2007

Greetings investors!

I’ve been analysing the daily chart for Canada’s Venture Exchange, the CDNX.  The index is heavily weighted in junior mining stocks, so it’s a good barometer of where stock prices in the sector are headed over the short and long term.

Last week I said there were bullish signs suggesting a move back to previous highs, and that this week would tell the tale. I haven’t seen any major crosses yet. The weekly chart suggests the three major indicators, the slow stochastic, relative strength index, and MACD, are still in an upward continuation trend and all well short of being in overbought territory.  My forecast is slow, steady, even progress upwards.

To the investor, that means we should hold our positions for the time being. Rising oil and precious metals prices have certainly helped keep the market bouyant, and until those taper off I’m not selling. The time to buy of course was during last August’s sell off.

Meanwhile, some of my favourite stocks are doing well. We saw a nice spike in Ivanhoe Mines (IVN.TSX) today, up $1.70 Cdn in midday trading to $15.40. We got involved in that one in our October 3 edition (Reiterated BUY on Ivanhoe Mines) when it was at $12.50 Cdn, and predicted it would retest an earlier high of $18 Cdn.

My fave oil and gas junior, Lexaria Corp (OTCBB LXRA) has also seen some action in recent sessions, rising about 10% to $1.64 US yesterday and today. The company has new wells and new production coming on stream from its joint ventured properties in Mississippi, so I expect to see better cash flow from operations going forward.

I’ve got a pair of Canadian nickel juniors still under a buck: Crowflight Minerals Inc. (CML.TSX-V) and First Nickel Inc. (FNI.TSX) should fare well over the medium term, and if this rally gets legs we could see them double in the next three months.

I also like QGX Limited (QGX.TSX) , with coal, gold, and silver in Mongolia, and Rubicon Minerals Corp. (RMX.TSX), with copper/zinc in Alaska.  RMX is up $0.34 to $2.08 Cdn as of midday today.

Careful out there!

Kb

The BarkerLetter on October 11th 2007 in Commodity investing

2 Responses to “Canadian junior index trends higher, suggests gains to come!”

  1. Paul responded on 13 Oct 2007 at 1:23 pm #

    Why FNI? It’s trading about 7.5x ‘08 annualized cash flow assuming they get to 7MM lbs payable production in ‘08. FNI has incredibly high cash costs ($9.50 lb)

    Crowflight is trading about 1.8x ‘08 annualized cf. Has about $4.50 cash costs and will produce 12MM lbs starting in ‘08, ramping to 18MM lbs in ‘09.

    I’d sell FNI and go very long CML.

  2. The BarkerLetter responded on 13 Oct 2007 at 3:20 pm #

    Ok…

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