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Chart of the Week - Jan 7, 2008

Oriental Petroleum & Mineral Corp. "A" Shares (OPM)

OPM Monthly Chart - Broke Out from a Rounding Bottom, Now Bullishly Consolidating at its Highs

charts are courtesy of Metastock

OPM Daily Chart - Consolidating within a Wide Range, Trending Up in the Short-term 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Oriental Petroleum & Mineral Corp. "A" Shares (OPM) as well as some of the other oil stocks were the highlight of the market last week because of the strong performance of Oil in the world market and maybe because some people are already positioning ahead of its production in the Galoc project.

The long-term monthly chart of OPM tells us that the stock has convincingly broken out already out of a rounding bottom pattern and is now starting to trend up. The fact that prices already climbed to as high as 0.025 last June, dropped back down to 0.015 last August, and yet, was still able to climb back up and form a new high is already a good sign for the bulls. You can see in the chart above that, for the last four weeks, the stock has been simply consolidating between 0.022 and 0.027. The fact that the stock is already holding above 0.022 and is no longer dropping back down to 0.015 is also a good sign for the bulls. In my opinion, the stock is merely resting before it continues to trend up. The medium-term trend of the stock is already pointing to a target of 0.038 over the next few months, if not weeks.

For the short-term, the stock is still trading within a wide consolidation of between 0.022 and 0.029. It is currently trading up within that consolidation but, unless volume significantly increases, I expect prices to continue trading below 0.029 for the meantime. Still, notice in the chart above that the stock has broken below a minor resistance line (red diagonal trendline). For the last few weeks, although the stock has been holding above 0.022, the stock has already been forming lower highs, which may indicate a loss of upward momentum. With the break above the red diagonal trendline last week, the stock may be ready to trend up once again.

Position-traders, who currently have positions in this stock, are recommended to just hold and use a break below 0.022 as your mental stop. Those who would like to buy this stock are recommended to buy as close to 0.022 as possible. For Tsupiteros, you have a choice of either to trade the wide range of this stock, or, buy and hold. If you buy and hold, you also need to use a break below 0.022 as your mental stop. Some may probably want to use a break below 0.025 but that may be too close for comfort and you may just end up getting whipsawed in between. For those who would like to trade the range, just buy as close to 0.022 as possible and sell as close to 0.029 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.