^Disclaimer

^{Privacy Notice}

^{Terms of Service}

Chart of the Week - Nov 19, 2007

Lepanto Consolidated Mining Company (LC)

LC Monthly Chart - Broke Above its Consolidation, Starting to Trend Up

charts are courtesy of Metastock

LC Daily Chart - Encountering Resistance at 0.56 but Still Trending Up 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Lepanto Consolidated Mining Company (LC) suddenly came to life the last few days on the back of news that the Zijin Mining Group is interested in taking a 20% stake in Far Southeast Gold, which Lepanto Consolidated already has a 60% stake. The market became more fascinated by the stock not only because of the news, but also because of rumors that even Mr. Jerry Angping also became interested in the stock as well.

The monthly chart of LC shows that the stock appears to have broke above its consolidation, which it has traded in for the last three years now. However, to confirm this breakout, prices must first take out its previous high at 0.52, which it has held since the year 2005. After that level, there are no more obvious resistance levels until its previous high of 0.98. At this point, the stock is still vulnerable to a deeper than expected retracement since its uptrend is not yet that strong. At this point, prices may still drop back down to the 0.35 to 0.40 levels and it still would be considered to be trending up. Although, I have to admit, its volume the last one week is quite convincing enough to make a believer in this stock.

In the short-term, with the stock already climbing from 0.36 to 0.56 in just three days, the stock has now become a bit overbought. The decline last Friday to 0.49 was simply a reaction from this overbought condition. However, if the stock is to follow its short-term upward channel, it should already hold above the 0.44 level and continue to trend up. Worst-case, it may head back down towards its previous low of 0.36, but, given the strength of this stock in the last couple of days, I doubt it if it can still drop back down to that level. Best-case, the stock will simply consolidate above the 0.49 level for the next couple of days, and then, continue to trend up.

I can't blame Tsupiteros if you took profits in the last one or two days in this stock already. However, I would suggest that you continue to keep your eye on this one as the trend is still certainly up. While the stock may just consolidate first for the time-being, I would suggest Tsupiteros to try and buyback the stock on the dips. Most likely, I'm looking at a drop near the 0.44 level as the area where you would probably want to buyback the stock. But if the stock fails to drop anymore below 0.49 and continues to trade above that level, that would indicate that the stock is indeed strong and would indicate that the bulls would have to be a little bit more aggressive. Position-traders, on the other hand, are recommended to just hold on to your positions in this stock and place stops to a break below 0.36. Position-traders, who would like to buy this stock, are recommended to buy it as close to 0.36 as possible. Just be careful Tsupiteros, "Lolo" has certainly does not have one of the kindest reputations in the market.

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.