Canada Market Round-Up

The benchmark S&P/TSX Venture Composite Index (TSX: ^TSXV) started the last week on a positive note and maintained a bullish momentum throughout the week. The S&P/TSX Venture composite index increased by 12.57 points 1.79% to 714.66 for the week ending on May 27, 2022, as the bank earnings boost sentiments. The weekly chart indicates that the index prices are trading above the horizontal support trendline. On the contrary, the prices are trading below the 21- period & 50-period SMA, which can act as resistance in the near term for the index. The immediate resistance for the index is around 745, while the immediate support exists at around 690 levels. On the weekly time frame, RSI is pointing at ~29.72 levels, signifying the chances of the index to bottom at nearby current levels.

On the macro front, the upcoming major economic events that may impact the Canadian market sentiment include Consumer Price Index (CPI), Gross Domestic Product (GDP), Manufacturing PMI (Canada), Final Manufacturing PMI (US), ADP Non-Farm Employment Change, Revised Nonfarm Productivity.

Source: REFINITIV, Analysis: Kalkine Group 

Global Markets Wrap-Up 

On May 26, 2022, the S&P 500 index settled at 4057.84 with a WTD (week till date) profit of ~4.01%, and the tech-heavy Nasdaq composite was also increased by ~3.73% (WTD) and settled at 12276.79, whereas Russell 2000 ended the week at 1838.24, reflecting a profit of ~3.66%.

Considering the US market's performance over the last week, following the major global macros and data front, and analyzing the S&P/TSXV Composite Index, the two TSXV listed stocks fit the maximum criteria on the technical framework. The recommendations are based on the generic insights, entry price, target prices, and stop-loss for Starcore International Mines Ltd. (TSX: SAM) and Prairie Provident Resources Inc. (TSX: PPR) for the next 2-6 weeks.

Starcore International Mines Ltd.

Starcore International Mines Ltd (TSX: SAM) is a company that specializes in mineral discovery, development, and production. It has a variety of goods at various phases of development. The principal source of operating cash flows is the San Martin. The company owns a stake in a silver and gold processing plant in Mexico.

Price Action Analysis (on the Weekly Chart)

On the weekly chart, SAM’s stock price has broken the downward sloping trendline and is trading above the same. Further, the prices are also above the horizontal trendline which is acting as the support for now. The stock has recently started to show a gradual up-move, after taking support from the same trendline, indicating the possibility of an upside movement hereon. The weekly volumes also seem supportive, further indicating positive biasness coming into the price action. The next resistance level is plotted around CAD 0.360, and the stock may test that level in the short term (2-6 weeks).

 Source: REFINITIV, Analysis: Kalkine Group                       

Technical Analysis (On the Weekly Chart)

On the weekly chart, The CMP is above the trend-following indicator 21-period SMA and 50-period SMA further supporting an upward trend. The leading indicator RSI (14-period) is also in positive territory and is currently at the 56.614 level. The weekly volumes also seem supportive of an upside movement.

General Recommendation:

As per the above-mentioned price action and technical analysis, we can conclude that Starcore International Mines Ltd is technically well-placed on the chart. Therefore, we recommend a 'Speculative Buy’ rating on the stock. Investment decisions should be made depending on the investor's appetite for upside potential, risks, and previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. Below is the summary of our recommendation.

Prairie Provident Resources Inc.

Prairie Provident Resources Inc. (TSX: PPR) is a privately held oil and gas exploration, development, and production firm focused on oil and natural gas. The company's operations are principally centered on the Ellerslie, Lithic Glauconite, and Banff formations in the Princess and Michichi areas of Southern Alberta, as well as an, established and proven waterflood project at their Evi site in the Peace River Arch area of Northern Alberta.

Price Action Analysis (on the weekly chart)

On the weekly chart, PPR’s stock prices are trading above the previous resistance, which is acting as a support now of CAD 0.185 and formed a bullish hammer (bullish reversal) candlestick pattern indicating an uptrend. The stock has recently started to move up, after taking support from the same horizontal trendline, indicating the possibility of an upside movement hereon. The weekly volumes also seem supportive, indicating positive biasness coming into the price action. The next resistance level is plotted around CAD 0.325, and the stock may test that level in the short term (2-6 weeks).

Source: REFINITIV, Analysis: Kalkine Group

Technical Indicators Analysis (On the weekly Chart)

On the weekly chart, The CMP is above the trend-following indicator 21-period SMA and 50-period SMA further supporting an upward trend. The leading indicator RSI (14-period) is also in positive territory and is currently at the 61.254 level. The weekly volumes also seem supportive of an upside movement.

General Recommendation:

As per the above-mentioned price action and technical analysis, Prairie Provident Resources Inc. seems to be technically well-placed on the chart. Therefore, we recommend a ' Speculative Buy' rating on the stock. Investment decisions should be made depending on the investor's appetite for upside potential, risks, and previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. Below is the summary of our recommendation.

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include updates on Gross Domestic Product (GDP), Manufacturing PMI etc. Noted below are the upcoming week's major global economic events that could impact the S&P/TSX Composite Index and listed stocks' prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00); however, returns are generated within 2-6 weeks' time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within a short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors that could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks, etc.

Note: How to Read the Charts?

The Green color line reflects the 21-period moving average, while the Red color line indicates the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black color line in the chart's lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

The Blue color bars in the chart's lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume, and we consider stocks with greater than or equal to 200,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange color lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: - 

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is May 26, 2022. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

CAD: Canadian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.