This Junior Gold Explorer is Soaring Last 3 Months

To say that gold stocks, particularly speculative ones listed on the TSX-Venture, have gone under-appreciated lately is about as weak of a statement as saying coronavirus has been a little bit of an inconvenience so far in 2020. With the softness in junior gold explorers - despite gold reaching its highest level in over 7 years - raising capital for these upstarts has been as easy fitting a camel through the eye of a needle.

Good thing for Northern Superior Resources (TSX-V:SUP), the holder of a large portfolio of high quality assets in Tier 1 jurisdictions in Canada, that it has Michael Gentile, CFA, on its board of directors. Gentile, which came on as a SUP director in December, said in January that the company is "dramatically undervalued." At the end of December, Gentile bought a 19.9% stake in the company, investing $437,000 in a private placement.

Gentile acquired his shares at (in Canadian dollars) $0.07. Shares have subsequently surged to the mid-$0.20. The company is now seeking to raise another $3.6 million, part at $0.25/shares and the majority at $0.36/share. With its close Friday at $0.24/share, SUP still only has a market capitalization of $9.9 million.

Technical traders should be patient with SUP and watch for a close at $0.26 before making an entry as the stock is near resistance through Friday's close.

There is more resistance ahead at $0.275 and then $0.30. We suspect that if SUP breaks through resistance at $0.25 that it is going to keep on rolling to reach our near-term price target at $0.35. That was a good area of support in 2017 and 2018 and turned around to be strong resistance in 2018/2019, so don't play around with it at that level.

With an entry at $0.26, that means the current resistance at $0.25 will have flipped to become support. That is the only area we will give any attention to. Set a stop/loss at $0.24 to keep this trade at a very favorable risk/reward profile. We don't like stocks that breakout and then can't hold the breakout point on any quick pullback.

Aiming for $0.35 implies and upside opportunity of 34.6%, while the downside to $0.24 is just 7.7%.

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