Technical Analysis

PLM Polymet Mining Corp Ready for an Uptrend ?

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plm20090729

Polymet Mining Corp may be getting ready for some sort of uptrend here pretty soon.  If you look at the chart I can conclude a few things already.

  • It has held support on its uptrend line since mid March with 2 tests.
  • It has completed a consolidation of about 2 months duration.
  • It has broken through the resistance as defined by the white downtrend line.

So I think we might see a trickle of an uptrend on this one.  But I have to add that these mining stocks are not for the faint of heart.  In my experience they tend to trade with heavy retracements and cumbersome up trends.  And it makes sense that they trade that way because they are in the mining industry which in generally requires large equipment and investment costs and slow to market type products, especially when they are in the exploration stage.

Apparently Polymet wants to mine copper, nickel and other precious metals precipitate according to their website.  You know, I really wish all mining companies right on their homepage would say in very large text exactly what they are mining for, what their proven and probably reserves are, and when they plan to start production (or if they are producing right now how much).  That way it give the entire investment community an quick 1-2-3 idea of what they are dealing with.  Perhaps I am a bit lazy to dig through all their information myself but it just makes sense to me to provide that right up front especially for mining companies since it is one of the most important factors in their valuation.

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Watching EPEX Edge Petroleum Corporation for a Signal

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We are keeping an eye on Edge Petroleum Corp EPEX for a possible decision point in early August.  EPEX is a crude oil and natural gas exploration company.  So clearly the price of oil and natural gas is one factor in the potential future price of EPEX.

I did a brief post on the price of natural gas earlier indicating that natural gas as represented by the UNG ETF is slowly starting to form a bottom.  It probably has quite a bit more work to do at the lows for a clearer picture on a real trend change, but for now the first major guidepost for UNG is the July monthly closing price bar and then the follow through on the August price bar.

We already know that the price of crude oil has been able to get a substantial recovery rally going from the depths of its bear market lows.  Now if natural gas can start a similar trend, we feel it will be beneficial to EPEX.

More important than that however is the actual price action on EPEX.  Lets take a look at what it has been doing.

epex20090728 

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SP500 has Valid Breakout but Approaching Top Line Resistance

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spy20090724

The SP500 had a clear valid breakout yesterday on confirmed volume according to the numbers that I look at.  Yesterday was a ‘sign of strength’ and it was what we needed to see to make this a valid breakout above the 950 level.

I can tell you flat out that one of the most common pieces of price action I have seen over the years which happens almost with spot on regularity is the retracement of price right back to the breakout level.  In the case of the SP500 that would be near the 950 level.  So if we can get a retracement back to that area on low or weak volume it would be an ideal scenario of going long as long as that support holds.

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PIR Pier One Looks Ripe for a Breakout Soon

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pir20090723

PIR or Pier One the specialty retailer looks like it is ripe for a breakout soon.

I am initiating a buy stop on PIR at 2.30 for tomorrow with a protective stop at 2.09

I like how PIR has held tight in this sideways range since early May and not given back too much ground especially considering how far and how fast it has come since the March lows.

It looks like constructive cause building to me.  There were two blow out spikes that occurred about a month ago, but in each case both of them failed to hold above resistance.  I believe those spikes are referred to as upthrusts. In each case they were on quite heavy volume.  So you saw new longs come in on those spikes and shorts unfortunately got blown out.  All of this is part of the cause building process. So now it seems patience is in order and lets see if PIR can get a breakout going here.

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UNG Natural Gas ETF Reverses down hard

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UNG2

Ok well I am a bit disappointed in the way UNG played out. UNG stopped out today right at the close at 12.90 for a loss of 7.06%.  I suppose it is better to be stopped out right at the close of the day than to sit on something like UNG overnight.  This was a violent in your face reversal. Wow.  The chart above shows a clear birds eye view of what is going on with UNG.

The left side of the chart is monthly price bars.  You do not have to know much about technical analysis to know that this chart depicts a crashing price and severe price weakness. But the interesting part is the most recent monthly price bar that has a little yellow arrow pointing at it.

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There is a Blockbuster Trade Developing in the Gold Market

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gold20090722

There is in my opinion a blockbuster trade developing in the gold market right now.  It is one of those slow motion type developments that usually catches people off guard.

This has the potential to be a very big trade in my opinion.

The chart to the left is a simple representation of what I am talking about. I will go into more detail on this in future posts.  You can click on the chart to the left to see it full size. The trade developing is a combination of a symmetrical triangle pattern in the gold price in addition to very bullish seasonals coming in September 2009.  The red shaded area represents the very bullish seasonal time frame for the gold price.  The green shaded area represents break out territory of the gold price from this several month congestion area also represented as a somewhat large symmetrical triangle pattern.

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Fifth Third Bancorp FITB and Chemtura CEMJQ on the Watchlist

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fitbcemjq

I am initiating FITB and CEMJQ on the BestOnlineTrades recommended list with buy stops.  That means that they are not fully recommended yet but are positioning themselves possibly for some good upward movement.

FITB is a mid cap bank that has a fairly clean chart and has been price trending upwards for quite some time now.  It has that run away rally during early May but since that time (about 2 months) it has consolidated in a slow downward slanting wedge of sorts.

Now it finds itself kissing the up trendline as of today and so far holding ground.

So I am initiating a buy stop at 7.60 for FITB on the premise that once it is able to get above down trend resistance we could start to see a new up trend.

CEMJQ or Chemtura is the Chemicals company with large international exposure that could see benefits from a collapsing dollar price.  That one has also had a nice run along and uptrend line and done a more violent pullback back to up trendline support.  I am initiating a buy stop on CEMJQ at .2750

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Time to RADAR UNG possible BUSTED Pattern Setup

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This is an important heads up.

I mentioned the UNG Natural Gas ETF before as having a possible busted pattern setup (See the related posts section at the bottom of this article).  A busted pattern setup is when you see a stock or index have a breakout out of a pattern (for example a symmetrical triangle) in the intended normal direction of the pattern.  But then instead of a continued follow through, the price reverses back inside the pattern for a complete reversal.

By doing so the stock or index is giving the exact opposite signal. UNG is up 4% right now off the bottom.

ung20090722

Based on the chart above a move back inside the range of the triangle slightly north of the 15 area could activate the busted pattern bullish signal here.  There is absolutely no question that natural gas futures and the UNG have been in an extremely bearish trend since July of 2008.  So here we are at the bear market lows.  These types of setups off of major bear market lows can be some of the best setups out there because the first moves off of a bear market are usually the most rewarding.

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