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Chart of the Week - Oct 8, 2007

Pacifica, Inc. "A" Shares (PA)

PA Daily Chart - Trending Strongly to the Upside

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Pacifica, Inc. (PA) has suddenly awaken from its hibernation this week and is once again the highlight of the whole PSE this week. Don't ask me, what the news is? I have absolutely no idea what the hell is going on. Anyway, I only showed the daily chart of the stock above since the longer term charts would basically show the same picture.

Obviously, the stock has broken above its consolidation and has broken above its major resistance at around 0.21. Of course, when the stock broke above the resistance line, the stock began trending strongly to the upside. As you can see in the chart above, the breakout above the consolidation was accompanied by heavy volume, thus, making the breakout very reliable and convincing.

Last Friday, as prices gapped up to 0.25, it was able to climb to as high as 0.26 but failed to climb any higher. It dropped back down to 0.235 and was able to close the gap that it left when it gapped up from the previous day. From 0.235, it went straight up to close the day at 0.27. That behavior tells me that the stock is still bound to go higher. The fact that it was able to hold above its support at 0.235 and was still able to form a higher high on the intra-day chart, indicates that the stock is still strong. While I wouldn't discount the possibility that the stock may still drop back down to 0.25 or thereabouts, I would tend to think that this baby will eventually retest its major resistance at 0.30 within this run.

You can see in the chart above a clear-cut uptrend with its support currently at the 0.20 level and its resistance being at the 0.30 level. If it continues to follow this trend, I would expect some heavy resistances as the stock moves closer and closer to that psychological 0.30 level. Can it not break above 0.30? If there is one stock that can do the impossible, it is certainly this one right here.

Tsupiteros, who are currently holding this stock, are recommended to just hold and use a break below 0.235 as your mental stop. Those who would like to buy this stock are recommended to buy as close to 0.235 as possible. Those who prefer using counter-trend trading strategies may want to take profits as close to 0.30 as possible. Just be sure you know how to buyback if in case the stock fails to stay below that 0.30 level.

Would it be advisable to position in this stock for the medium or long-term? I definitely wouldn't advise it. The stock moves from trough to peak by 100% and from peak to trough by 50%. If you were trading this stock for the long-term, you would probably have weeks that you be terribly depressed, if not suicidal. Then, it would be followed by weeks of euphoria, almost to the point of being better than sex. If you can bear than kind of volatility, then, by all means, buy PA for the long-term! :-)

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.