This Week’s Commentary – February 23, 2008 – The Bear is Dead! Long Live the Bear!

by JDH on February 23, 2008

Finally we started to see some signs of life this week.

My portfolio went from a yearly loss of over 7% at the end of last week to a yearly loss of 5.8% as of today. That’s not great, but we are at least moving in the right direction.

As I said last week, I am now starting to deploy some of my cash.

My first purchase this week was to increase my holdings in RH.V – Red Hill Energy, Inc. I like this one; you can read my detailed comments on the Red Hill Energy blog post I posted on Tuesday February 19. I like the company because it has interests in both coal and uranium, so it gives my portfolio some diversification. Even better, they have a joint venture on the uranium properties with MGA.TO – Mega Uranium Ltd., which shares a CEO with PNP.TO – Pinetree Capital Corp. I don’t own either Mega or Pinetree, but knowing how Pinetree operates it’s not a stretch to assume that if Red Hill finds more uranium, Pinetree will be a buyer, which should drive the price up. Even without the Pinetree angle, I like it, and I may purchase more this week.

Next on my list was to get back into DML.TO – Denison Mines Corp., a stock I haven’t owned for many months.

Denison Mines Corp

I put in an order and got filled on Tuesday at $6.93, so obviously I’m happy today. I like the chart because:

  • the downtrend going back to November has been broken (although the longer term downtrend remains intact);
  • the close at $7.70 means we have crossed over the 50 day moving average (currently at $7.75) which is usually a great buy point; and
  • the downtrend in the RSI has also been reversed and is moving in the right direction (although now we run the risk of the RSI getting toppy).

My plan is to put in a sell order around the $10.50 level, since I assume we will hit some resistance just over $11. That would give a nice profit, and would allow me then to repurchase on dips. If it doesn’t get to $10.50, that’s fine, I’m content to sit and wait.

My next purchase was AXR.TO – Alexco Resources Corp.:

alexco resources corp

I think this chart provides a nice contrast to the Denison chart. With Denison, the short term downtrend has been broken; that hasn’t happened, yet, with Alexco. The RSI and 50 DMA have also not advanced as far with Alexco as they have with Denison. Obviously I’m betting that the Alexco chart next week will look more like Denison’s chart this week, so I started buying at $4.13 on Tuesday, so I’m happy with Friday’s $4.40 close.

Other purchases this week included:

I had buy orders in on other stocks that, alas, were not filled:

Obviously this last list is all gold stocks, so it’s not surprising that my “stink bids” didn’t get filled, given the strength in gold this week.

Again, I’m not worried. We all believe that gold is on a run past $1,000. However, my gut tells me that there will be resistance around the $1,000 level, and a pull back to the $850 level would not surprise me, since nothing goes up in a straight line forever. That’s why I’m not chasing anything. If I can’t get the price I want today, no problem, I’ll be patient, since more opportunities will come.

Does my buying this week mean I believe the bear market is over?


The economy is in bad shape. More bank write downs are to come. The Fed will have to cut interest rates again. That will cause a flight to gold, which is good, but it also creates a liquidity crunch which, as we all know, is what tanked our uranium stocks last year.

Therefore, I plan to ride the wave over the next month or two, but I also plan to keep tight stops, and at the first prolonged signs of weakness I will run like a chicken for the sidelines. This is not the start of a glorious new age of easy profits. We are not in 2006. Caution, prudence and discipline are more important than ever, which is why, even after my recent buying, I am still 48% in cash (down from over 60% last week). I will continue to deploy cash, but only if there are deals to be had.

The bear is dead (for now); long live the bear (later in the spring, probably).

Thanks for reading, and please continue to post your thoughts on the Buy High Sell Higher Forum.

{ 0 comments… add one now }