^Disclaimer

^{Privacy Notice}

^{Terms of Service}

Chart of the Week - Oct 22, 2007

NiHAO Mineral Resources Int'l, Inc. (NI)

NI Weekly Chart - Testing Major Resistance at 30.00

charts are courtesy of Metastock

NI Daily Chart - Still Trending Up but Appears to be Reversing Down 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

NiHAO Mineral Resources Int'l, Inc. (NI) was again in the spotlight this week on news that the company bagged a production purchase agreement with Australian mining giant BHP Billiton. However, with the news already out last Friday, it would seem that the market sold on the news. Couple this with the fact that there was a terrorist bombing in Makati last Friday and a 2.5% drop in the US markets overnight, and what you get is the perfect storm to bring this stock to the floor on Monday.

In the weekly chart above, you can see that prices have already reached the upper end of its range. It looks crystal clear that NI is currently stuck within a trading range of between 7.00 and 30.00. While the short-term trend of the stock is still certainly up, the fact that prices are already very, very close to the upper end of its range, is not a good sign for the bulls. Just imagine all the people who bought this stock between 25.00 and 30.00, prior to it dropping to 7.30. If you saw that the stock dropped to 7.30, wouldn't you sell your position and just be contented with breaking-even? Couple this with the fact that there are also Tsupiteros, who managed to buy at lower levels and are looking to take profits to as close to 30.00 as possible, and what you get is a tremendous resistance at the 30.00 area.

On the daily chart above, you can see that prices have already started to hesitate moving higher in the last couple of days. This is because a lot of people were already selling as close to that 30.00 level as possible. With the stock dropping last Friday on the BHP news, it seems quite obvious that people sold into the news. With nothing more being anticipated in this stock in the short-term, I'm afraid prices may start dropping back down from here. While short-term support is now at the 24.00 level, I wouldn't be surprised if prices continue to drop further than that.

Come Monday morning, with all these bad news in the background, I wouldn't be surprised if prices gap down significantly at the open and eventually continue to move downwards. Major support of the stock is now pegged at the psychological 20.00 level. I sure hope Tsupitero, who had long positions in this stock, were able to take profits in the last couple of days. For those who still have positions in this stock, it is quite difficult for me to tell you what to do come Monday morning. I guess if prices already drop to as low as 20.00, you probably wouldn't want to sell anymore because buyers may already be lining up to buy at that level and you may just end up selling at the lows. But, on the other hand, if you don't sell and prices continue to drop further, you may end up holding again a stock that, potentially, could drop back down to 10.00. For sure, if prices gap down and climb back up near Friday's close of 26.00, you may want to take your profits and run. For those who prefer using counter-trend trading strategies and are looking for a place to buy, you may want to buy as close to 20.00 as possible. I really feel pity for all those who are attempting to "buy and hold" this stock. Because of the exaggerated volatility of this stock, this certainly is not something that you would want to use a "buy and hold" strategy.

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.