Odd day yesterday - fundamentally should have moved higher (on the back on the Anduramba news), but then again perhaps some out there had their reservations regarding Mr Rawlings departure (as I said yesterday, personally I think its a plus for DGR - will allow them to recuit someone with a bit more time on their hands for the next phase of their development).
Some technical levels that you may want to keep in mind -
Supports: --------- 37.5 = 50% retracement of move from 26.0 to 49.0 37.0 = major uptrend line (starting April 3, 2007) 35.0 = 61.8% retracement of move from 26.0 to 49.0 35.0 = base of previous gap (35.0 to 36.0) 34.0 = 38.2% retracement of total move (9.5 to 49.0) 29.5 = 50% retracement of total move (9.5 to 49.0)
Resistance: ----------- 40.5 = minor downtrend line (starting June 15, 2007) 42.0 = several previous daily highs 46.5 = congestion (previous high days VWAPs) 49.0 = previous high (could argue that it is 49.5) 50.5 = breakaway point (moves to new bullish count)
Candles - still showing consolidation, with last three days within previous bull candle (38.0 to 41.5). Suggests support around 37.5. No major triggers sighted.
RSIs - closed yesterday at 44. Average RSI for DGR around 56; lowest point 33. Historically DGR does not trade with RSI below 40, and when it does (has only happened three times before) it is only for one day and is immediately followed by RSI moving back above 56 within two days. On that basis cannot see more than one more down day (as another day similar to yesterday would push RSI below this 40 level; so it follows that it would bounce back immediately after that).
In summary - fundamentals sound, and strengthening. SP discount to EV now exceeding 40%, and will be deeper discount when NPV of Anduramba formally upgraded (we know its coming, we just don't know when!). Should hear some good news on progress of AusNiCo shortly. At the very latest, the quarterly summary (due 31/7 or 1/8) will "big up" DGR's progress on all four major projects (Anduramba, AusNiCo, Mt Isa Metals, and Eastern Uranium). AusNiCo to go public in H2/2007, so the lads at DGR will be keen to paint a good picture.
Technicals suggest that we are definately in buying territory. Short-term sales may be post-June-30 driven (deferring tax profits over end of year), but no fundamental reason for sales that we know of. The range 34.0 to 37.5 provides many (many) buy signals, at levels around 33% cheaper than the previous highs.
IMO, a good time to get in if you are not already on the back of this one.
Have a great day.
Best regards Kit
(All personal opinion only).
DGR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
