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Chart of the Week - Sept 3, 2007

Southeast Asia Cement Holdings, Inc. (CMT)

CMT Weekly Chart - Bullish Morning Star but already Testing Resistance

charts are courtesy of Metastock

CMT Daily Chart - Potentially Bearish Shooting Star Pattern 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Southeast Asia Cement Holdings, Inc. (CMT) suddenly came to life once again this week with its volume of transactions suddenly increasing dramatically virtually overnight. Weird! I wonder how that suddenly happened. In the last two months, 5 million volume for a day would already be considered big. Then, all of a sudden, volume suddenly started to swell last Tuesday with 139 million shares changing hands. The next three days, volume was 104M, 117M and 66M last Friday. Take note, there are no new disclosures on this stock in the last few days. Obviously, something sneaky is going on in here.

The weekly chart of CMT above would show that the stock is still very much in a downtrend. However, last week's long white candle on huge volume appears to have indicated a trough at the 0.81 level. Could this long white candle last week carry over some more strength in this stock in the next coming weeks ahead? You can see in the chart above that in its weekly chart, the line in the sand is that 1.40 level. As long as prices stay below that level, one should interpret the stock as trending down and one should continue to expect lower prices. But, if the stock is able to break above that level, I wouldn't be surprised if prices climb all the way up to its next major resistance of 1.70. For this coming week though, I expect the bulls and bears to probably slug it out here near that 1.40 level.

For the short-term, you can see from the chart above that CMT has been enjoying a very strong uptrend since its trough at 0.81. However, last Friday, with the stock already climbing to as high as 1.34, it formed a bearishly-looking shooting star pattern. While not exactly bearish in themselves, a shooting-star pattern indicates that the uptrend is hesitating to continue and may lead to a downtrend. The next one or two days will be critical for the short-term direction of the stock. The level to watch out for is last Friday's low of 1.24. If the stock is able to hold above this level, there is a possibility that the stock may actually climb to as high as the mid-1.40s levels, if not higher. But, if prices break below that support at 1.24, it may lead to a drop back to its short-term support at 1.10. Take note, what is keeping this uptrend intact is that 1.10 level. If prices break below that 1.10 support level, expect prices to trend below that previous low of 0.81.

In summary, while the chart of CMT doesn't look like anything different from most of the other stocks in the market right now, the striking difference is the sudden increase in its average daily volume. This single indication may tell us that there may be something more than just a dead-cat bounce in this current rally. While it may seem that the stock is bound to continue trending down and appears like will have a difficult time here at the 1.34 to 1.40 levels, I would advice to simply keep your minds open and accept that anything is possible. I have a feeling this may surprise everyone to the upside.

Tsupiteros, who currently have positions in this stock, are recommended to just hold and use a break below 1.24 as your mental stop. Those who would like to buy are recommended to buy as close to 1.24 as possible with stops placed on the break below the same level.

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.