Pinetree Capital, Mega Uranium and Fronteer Development – Some Thoughts

by JDH on January 5, 2007

I decided to take today off, since it’s the last day of the Christmas vacation before my kids go back to school. As I sat here at my desk reviewing charts, my 7 year old son wanted me to print out some charts so he could analyze them. He particularly likes ones with lots of squiggles. I printed off the charts of PNP.TO – Pinetree Capital Corp. , MGA.TO – Mega Uranium Ltd., and FRG.TO – Fronteer Development Group Inc. He looked at the charts of Mega and Fronteer and here’s what he said:

“These charts look the same.” Apparently he thought I printed out the same chart three times.

(You can’t pay for this brilliant analysis anywhere else, right?)

Of course, he is correct. In fact, all three charts look similar (I have produced them below). Of course the similarity he noticed was the big downtick that has happened this week, after the steady increases of 2006.

What struck me the most was the way that the charts, particularly of Fronteer and Pinetree, have pulled back to the uptrend line that started back at the end of September. From this I conclude that we are in a normal consolidation. The major uptrend lines going back to the beginning of 2006 are not even close to being broken, and we are only now retreating closer to the intermediate term uptrend lines.

I think this is good news. We may still consolidate for a few more days yet, but my gut feel is that we are nearing the end of this minor consolidation, and things should look good as the month goes on. I could of course be totally wrong, which is why we all get to make these guesses for ourselves.


Here’s the Mega chart: note the similar downtick:


And here’s Fronteer.  I like this one the best, since it appears to be coming right back to the uptrend line, which, if it holds, may prove to be a good entry point:


{ 4 comments… read them below or add one }

Fabe W January 5, 2007 at 7:13 am

Out of the mouths of babes, eh?

I agree with you and your son. Looking at key stocks such as Mega, Pinetree, SXR and Laramide, these stocks made decisive breakups before year end, and have merely pulled back to the breakup points.

If I was braver I’d put my money where my mouth is and buy more now. As it is, I feel it’s achievement enough for me to stay put in the things I’ve got against a backdrop of fear and red ink in the resource sector. (Triggered largely by dollar rally and anomalous copper weakness – I bet there is one or more huge short positions involved.)

Cheap talk prediction: another major upleg is coming for the uranium sector, starting next week.

ec January 5, 2007 at 9:33 am

Your son’s analysis is brilliant – seeing the forest and not the trees right! I am not completely invested and will wait for a bit more consolidation before buying more of the above three. Dines does not seem to be scared right now right.

Any more thoughts on the performance of CMK.TO?


JDH January 5, 2007 at 9:47 am

I agree that better times lie ahead, although this has not been a fun week.

As for Cline (CMK.TO), nothing is showing up on the Insider Trading report; the last reported transaction by Pinetree was the 100,000 shares they purchased on December 21. Since they typically report their transactions within two days, it now seems doubtful they were the buyer, although we will know for sure next week.

I can however report that Kenneth Bates, the CEO, exercised 300,000 options on January 3 (at 10 cents each), and subsequently sold them for prices ranging from 55 to 57 cents, so obviously he is smarter than we are. He will holds over 2 million shares, so I do not interpret his selling as a negative; I assume he just wanted to cash in some profits. For now, I’m holding.

eljefeford January 5, 2007 at 5:01 pm

I too think that a upswing is in our future. Commodities as a whole got pretty slammed the last few days and I think they took uranium stocks with them. I was actually pretty happy as I got to pick up some UrAsia (uuu) at nice entry point. I think Denison, SXR, and Paladin are looking pretty enticing also.

Your seven year old seems pretty astute. Maybe you could put all your stock picks on a dart board and let him have at it. I suspect most of them are going to do pretty well in the coming months.