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Chart of the Week - Sept 15, 2008

 Loadstar Investments Holdings Corp. (LIHC)

LIHC Weekly Chart - Continuing to Consolidate, Testing Support at 7.90 

charts are courtesy of Metastock

LIHC Daily Chart - Holding Above its Support at 7.90 but           Encountering Resistance at 8.70

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Loadstar Investments Holdings Corporation (LIHC) was one of the stocks that was heavily sold down last week as prices dropped from 10.00 to 7.90 in just four days time. It was able to rally last Friday back to the 8.70 level before ending the week at 8.50. The big question now is, is this rally an opportunity to buy the stock, or, is this rally an opportunity to sell it? Rumor has it that the sell down in this stock was brought about by what happened to ATN Holdings, Inc. How is it related? Well, let's just say that both stocks are being traded by the same group of brokers.

You can see in its weekly chart above that the stock has once again encountered resistance at the 12.50 level. In hindsight, it would seem that this 12.50 resistance line is a lot stronger that what it seems. With the stock holding below its major resistance line at 12.50, it ended up dropping back down to its support at 7.90. Will this lead to a retest of its previous low at 5.20? That certainly is possibility but, for the meantime, let's see first if the stock will be able to hold above its support at 7.90. Obviously from its weekly chart above, the stock is merely consolidating within a very wide range of 5.20 to 12.50. I just don't see prices going anywhere above or below this range for the time being.

In its daily chart above, you can see that the stock is in a relatively strong downtrend but is now trying to rally from its lows. The stock is currently being supported by its previous low at 7.90 as well as from the supportline of its downward channel. The big question in this time-frame is, will the stock be able to break above its resistances at 8.70 to 8.80 and climb back up towards its psychological resistance at 10.00? If the stock is able to break above these resistance levels, then, I would presume that the stock would be able to climb towards the 9.50 to 10.00 levels. However, I will be quite concerned for the bulls if the stock fails to break above its resistances at 8.70 to 8.80 and retests its previous low at 7.90. If that occurs, there might be a chance that prices may even drop below 7.90 and head towards its previous low at 5.20. For the meantime, I am presuming that this rally that started last Friday would continue, unless proven otherwise by the market. Remember, even if prices are able to break above its resistances at 8.70 to 8.80, it is still trending down so be careful on trying to buy the stock at higher prices.

Tsupiteros, who currently have positions in this stock, are recommended to just hold and use a break below 8.30 as your mental stop. For those who are looking to buy this stock, I would suggest to buy it if prices are able to hold above its minor support at 8.30. I would certainly no longer buy the stock if it drops below 8.30 because that would already indicate to me that the stock may break below its support at 7.90. I would also not recommend buying the stock if it climbs above 8.80. Since any rallies at this point is still considered to be nothing more than a rally within its overall downtrend, there is a risk that prices might simply climb towards 9.50 or so but eventually drop back down towards 7.90. Those who would like to sell this stock have the decision of whether to sell it as close to 8.80 as possible, or, as close to 10.00 as possible. With the stock quite erratic for now, I would not recommend Position-traders to enter this stock for now.

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.