Altamira Gold Corp. (ALTA:TSX.V; EQTRF:OTCBB) is a gold stock that is at a very low price and showing signs that it is about to emerge form a completed base pattern, a combination of factors that gives it the potential to make big percentage gains in a short space of time, which is our "prime directive."
We will start by looking at a long-term 20-year chart, not because it is technically of much use, but because it gives us an overview of the history of the stock. As we can see, overall it has been a useless investment since it started trading in 2001. After it started trading there was a brief dramatic spike, after which it came crashing down to a very low level and it has never really recovered, but instead trundled sideways for many years. However, shorter-term charts open out what looks like a gigantic base pattern on this chart to reveal that there have actually been some big tradable swings within this giant trading range.
The 6-year chart reveals that within what looks like nothing more than a gigantic base pattern on the 20-year chart there has been a significant bull market and then a bear market during the past five years, with the bull market resulting in 20 times gains from the lows, which were all lost in the bear market that followed. An important point to observe is that, following the latest bear market, the price has been basing for a year now at the same support level where it based in 2013 and 2014 prior to the big run up in 2015.
On the 3-year chart we can examine the base pattern in more detail. We can see that it started to form when the price hit bottom in December 2016 after a steep decline during the 2nd half of 2016, even though the price made slightly lower lows in July of last year, so it has been going on for a year now, which has allowed time for the 200-day moving average to drop down close to the price and flatten out, a frequent and normal precondition for a new bull market. Of much greater interest to us though is the marked buildup in upside volume in recent months, that has driven volume indicators higher, especially the Accum-Distrib line. This is a clear sign that the stock is under accumulation and that a new bull market is incubating, and obviously, if the entire sector starts to advance now, as well it might, then Altamira could have "the wind at its back." Before leaving this chart a further thing it makes plain is that this stock is historically very cheap here.
Lastly we look at the 6-month chart on which we see that the ideal point to have picked it up would have been the dip to the C$0.16–C$0.17 area in mid-December, but having missed that our next best shot is now as it is reacting back following the sharp advance of late December. While it could drop a little more, the chances are high that it will turn again here or soon, so it looks unlikely that we will be able to get a better price, especially as the sector is now advancing.
Conclusion: Altamira Gold has little downside risk and a lot of upside potential, and is at a good entry point here, and is therefore rated an immediate strong buy.
Altamira Gold Corp. ALTA.V, EQTRF on OTC, closed at C$0.25, $0.197 on 2nd January 18.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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Charts provided by the author.
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stockmarket analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.