Friday night’s unemployment data in the US was not good (Unemployment at 10.2%) and is likely to further dent consumer confidence which is all important given consumers account for more than 60% of US GDP. These results reinforce my view that a double dip recession is highly likely in the US, starting in 2010. For this reason I am only interested in investing in companies with strong fundamentals which have the potential to outperform the markets in declining markets.
Todays Picks BCC/BCCO: BCC looks to have been consolidating recent gains but don’t be fooled by the calm. My money is firmly on news regarding the spud of the first Lee County well this week and that should provide the fuel for the next advance towards 10 cents. I’’ be looking closely for trades this week. On the chart the MACD has crossed down. Slow stochastics are looking a little weak and RSI has flat lined but news could change these indicators to positive quickly. I don’t hold at the moment but will be watching closely for trading opportunities this week. News Due: Spud date for Lee County well, confirmation of production ramp up at Pompano well to 6-7 mmcf/day.
MHM/MHMO: By my calculations approximately 3m out of 15m placement stock has hit the market. I think this week will see the supply of stock at sub 30 cent prices decline sharply and I would not be surprised to see an announcement about the completion of the acquisition of the Aluminium Salt Slag plant propel the price back towards new recent highs. I didn’t manage to buy more on Friday but will be watching closely tomorrow. News Due: Completion of the acquisition of the Aluminium Salt Slag plant and progress on the establishment of a silica plant in Tasmania.
CCU: A strong performance on Friday with a new closing high of 26.5 cents achieved. My target of 30 cents looks highly likely to be achieved this week however the only caution I have with CCU is the risk of a placement to boost cash coffers. However I believe the stock has further to run before that occurs. News Due: Further silver exploration drilling results should begin to flow in coming weeks.
ATI/ATIO: There was plenty of selling on Friday with the price closing down at its lows. The 4 cent level is now a critical level of support (old resistance) and needs to hold for there to be any hope left for the pennant I have mentioned before. I will not increase my stake until the price hits 4.6 cents. News Due: Potential expansion of the Bao Loc project. New project acquisitions to be brought into the company at any time.
QHL: With the price falling again on Friday I expect further retracement before the price begins to climb again. Stochastics and RSI are both falling and with a large gap down to 38 cents I think there is the potential for further falls in the next few days, perhaps exacerbated by T+3 traders exiting today. However I still expect much higher prices in coming months. News Due: There is potential for news on more supply contracts at any time.
ADN: SPP stock at 19 cents is due to hit peoples account on the 11th of November and as has happened over at MHM, I expect a certain level of profit taking. However ADN is now a strong buy due to their upcoming Rover 1 assay announcement in December. I liken this opportunity to one I took advantage of at THX when they were awaiting assay results from Thunderball. I held stock at 29.5 cents when they went into pre open at 34 cents. They opened at 48.5 cents and went on to hit 78 cents a few weeks later. Whilst I doubt ADN will have the same absolute increase the THX example highlights the potential here. I plan to buy this week. News Due: Assay results due in 3-4 weeks from the diamond drill hole at Rover 1 next to Westgold resources discovery.
DDT: This is one to watch closely today. If DDT can rise again today it could be starting its next leg up. Given stochastics are rising, the RSI has crossed 50 and MACD looks likely to cross in coming days there is reason for optimism. I will be watching DDT closely today.
Best of luck today and thanks for the kind words of support from many of you last Friday.
