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Chart of the Week - July 21, 2008

 ISM Communications, Inc. (ISM)

ISM Monthly Chart - Bullishly Consolidating at its Highs but Still just Consolidating for now

charts are courtesy of Metastock

ISM Weekly Chart - Continuing to Trend Up Strongly but Approaching Major Resistances Ahead 

charts are courtesy of Metastock

ISM Daily Chart - Bullishly Consolidating at its Highs

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

ISM Communications, Inc. (ISM) has been a cut above the rest of the market recently as prices were able to rocket higher from its low at 0.024 just last July 3, 2008 to its current high at 0.048. There was news that the company will be conducting a stock rights offering with the terms of one share for every five shares held at 0.026 per share. I've been hearing rumors that the stock is being propped up in order to make the offering more attractive.

In its monthly chart, you can see that the stock has been trading within a trading range of between 0.024 and 0.065. Given the weakness of the market over the past several months, I am quite surprised that the stock did not drop below its support at 0.024. Normally, the stock ought to be trading at the 0.015 level already by now. The fact that prices has been holding above its support at 0.024, is certainly a good sign for the bulls. However, prices will probably continue to be range-bound for now unless the stock is able to convincingly breakout above its previous high at 0.065.

In its weekly chart, you can see that the stock has been trading strongly to the upside and has actually formed two long white candle in a row. The fact that prices was still able to close the week at its highs, may indicate that prices are bound to continue moving higher this coming week. However, you can also see from the weekly chart above that the stock is currently approaching its major resistances at around the 0.055 to 0.065 levels. These resistances are very strong resistances, which will not easily get broken, unless the stock is able to generate significant volume to absorb all the sellers at these levels. For buyers to be willing to buy at these levels, there has to be a very compelling reason for buyers to do so.

In its daily chart, the stock is currently at an extremely high level already. However, its recent behavior suggests that the stock may not have seen its high just yet. Last Friday, the stock broke below its support at 0.045 but was immediately bid up to close the day unchanged at 0.047. That behavior already suggests that there is an inability of the stock to drop. If the stock were really weak, it ought to have collapsed already by then. Technically speaking, the stock may just be consolidating before it continues to move higher.

Tsupiteros, who currently have positions in this stock, are recommended to just hold and use a break below 0.044 as your mental stop. For those who are courageous enough to buy this stock, you may want to buy it as close to 0.044 as possible. For Position-traders, who are currently holding this stock, you may just want to hold and also use a break below 0.044 as your mental stop. I would no longer recommend to Position-traders to buy this stock anymore at current levels. While the upward momentum of the stock is still strong, the stock may be vulnerable already at this point since it is already too high. For those who prefer trying to pick the highs, you may want to try and take profits as close to the 0.055 to 0.065 area as possible.

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.