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Chart of the Week - Jan 28, 2008

Benguet Corporation "A" Shares (BC)

BC Monthly Chart - Trending Up Strongly

charts are courtesy of Metastock

BC Daily Chart - Broke Above an Expanding Triangle, Trending Up Strongly 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

When one thinks of the mining sector nowadays, one will probably first think to invest in either maybe PX or LC. Surprise! The strongest stock in the whole mining sector and even the whole market right now is Benguet Corporation (BC). There are rumors that the company will start shipping nickel to China soon.

The monthly chart of BC above shows the long-term price trends of the stock. You can see that the stock has broken above its major support at around the 17.00 level and is now currently trending strongly to the upside. The break above that 17.00 level signals the end of the stock's sideways trend and the beginning of its upward trend. After breaking that resistance at 17.00, it was all uphill from thereon. While the stock is still clearly trending up, it is now a bit on the high side already. There are no clear resistances from hereon because the last time its price was at these levels was the year 1990. The only obvious resistances are its historical highs between 42.50 to 48.00. I doubt whether the stock can immediately climb up to those levels without consolidating first. However, the fact that prices are in its highs may indicate that the stock still has some further room to climb.

In the short-term, the stock has been trading within an expanding triangle pattern for the last few weeks now. It looked as if prices were going to encounter resistance at the 27.50 level, which is the upper part of the expanding triangle. when suddenly, the stock continued to climb up and is now well above the pattern, thus, confirming that it is now in a trending mode. Given that the stock formed a long white candle once again and has closed the week at its highs, I would expect prices to continue climbing next week. I've indicated in the chart above a resistance at the 35.00 level. Knowing that the stock is now trending, it is very difficult to say where this uptrend will end. Suffice to say that the stock is now at high level but its upward momentum is still clearly very strong.

Tsupiteros, who are lucky enough to were able to buy this stock low, are recommended to just hold on to your positions and use a break below 25.00 as your mental stop. Those who would like to buy this stock are recommended to buy it as close to 25.00 as possible. I would be very surprised if the stock break below 25.00 in the short-term. If, on the other hand, the stock continues to climb up and you failed to buy the stock low, it is now up to you whether you would want to chase it. If you do chase it, I would suggest that you simply use tight stops.

Notes:

Short-term Traders/Tsupiteros vs. Medium-term/Position Traders: Recommendation for short-term traders or Tsupiteros are meant to be used by traders whose holding period are limited to one day to two weeks. Medium-term or position traders are meant to be used by traders whose holding period are two weeks to three months. Long-term investors whose holding period is more than three months should not follow these recommendations.