VGN update this evening from SolomonSmallCaps:
Greencastle Resources Update (VGN, TSX-V)
11 pm August 21, 2008
August 21 Closing Price: 0.33
The market is speaking…something BIG is about to happen with Greencastle Resources (VGN, TSX-V). We correctly called the bottom on this, and today VGN jumped seven cents to close at 0.33. The volume was not mind-boggling - 306,000 shares - but today was the busiest trading day in Greencastle in 12 sessions and we suspect the volume could really kick in tomorrow (Friday). Upon closer examination, the situation with VGN is even more bullish than we first thought.
Why do we say something BIG is about to happen with Greencastle? One only has to “read the tape” and consider the strong underlying fundamentals here. We believe a very powerful move is now underway with Greencastle that could ultimately take this stock beyond the highs we saw in late June. Yes, beyond 63 cents. And, as Glenn Beck would say, here’s how we got there:
Technically Speaking - Bullish Move Underway
This has been a pivotal week for VGN. Amazingly, through all of the carnage we have seen in the markets over the last seven weeks, not once did this stock close below its rising 100 and 200-day moving averages. The acid test came this week - Monday, Tuesday, and Wednesday, and after closely observing the trading action those three days we issued our buy alert.
Following a rip-roaring bull run, the best time to buy a stock is when it first drops down to its rising 200-day moving average, and this is what essentially happened with Greencastle Tuesday morning. As the Venture Exchange was tumbling below 1,900, with fear gripping many investors, market sell orders drove VGN all the way down to 22 cents, four cents below its 100-day moving average and just a penny or so above its 200-day moving average. The stock, however, quickly rebounded, and closed at 0.265. Intra-day on Wednesday, just like Monday and Tuesday, VGN briefly traded below its 100-day moving average but closed at 0.26 (right at the 100-day moving average).
Today’s trading action was hugely significant: Greencastle broke through an upper trendline, suggesting significantly higher prices, and the 10-day and 20-day moving averages both reversed and turned positive - all on the same day. That’s an automatic “buy” signal and a clear indication that a major trend reversal and a new bull phase are underway.
In addition it’s important to point out that as Greencastle’s new up-leg begins in the low ‘30’s, the stock is currently still very oversold. In fact, the Slow Stochastic Oscillator (another great technical tool) gives a “25” reading on VGN at the moment - the lowest we’ve seen it on Greencastle since early this year. That’s a very “bullish” reading and shows the stock has plenty of upside potential. The RSI (Relative Strength Index) has moved from oversold to neutral - again, VGN is a very good distance away from entering “overbought” territory.
Super Strong Fundamentals
We are going to expand considerably on this tomorrow night here at www.solomonsmallcaps.com, but there just aren’t too many companies on the Venture Exchange that have what Greencastle has - low market capitalization, millions in the bank, monthly cash flow, net earnings, and a diversified project portfolio (oil and gas, gold, coal and uranium). Very soon - next week we predict - Greencastle is going to announce record second quarter revenue and profits. The numbers, we believe, are going to be spectacular. Tomorrow night, we’re going to dig deeper into Greencastle’s fundamentals and what investors should expect in the soon-to-be-released second quarter results…with speculation on some exciting possibilities for this company in the weeks and months ahead. Does CEO Tony Roodenburg have an “ace up his sleeve”? We believe he does.
As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site at www.solomonsmallcaps.com
