^Disclaimer

^{Privacy Notice}

^{Terms of Service}

Chart of the Week - August 25, 2008

 United Paragon Mining Corporation (UPM)

UPM Monthly Chart - Rallying from an Oversold Condition

charts are courtesy of Metastock

UPM Weekly Chart - Bearish Shooting Star Pattern, Appears to have already Established Resistance at the 0.016 Level 

charts are courtesy of Metastock

UPM Daily Chart - Long White Candle followed by a Long Black Candle is Bearish

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

United Paragon Mining Corporation (UPM) made quite a show last week as prices suddenly went limit up last Wednesday. However, that was just about all the strength that it had as prices immediately dropped the next day and is now trading almost near from where it started prior to its trading last Wednesday. What the hell happened to this stock? Why was it bought up so aggressively last Friday only to be sold down so aggressively the next couple of days after? Prior to this movements, the company underwent corporate restructuring wherein its authorized capital stock were changed and its par value was decreased from P1.00 to 0.01. If I'm not mistaken, these changes improved the balance sheet of the company but to the detriment of existing stockholders since shares were used to pay for the liabilities of the company. Based on the movements of this stock in the last couple of days and the events that occurred prior to its movements, I believe something cynical is happening. Anyway, let's take a look at the technical picture of this stock below. The charts above have already been adjusted for the change in par and outstanding shares.

The movement of the stock in the last couple of days has been the first time in a long time that the stock has actually started to trend up in the short-term. For more than a year now, the stock has just been steadily dropping lower and lower. From its peak at 0.027 registered last June 2007, the stock dropped to as low as 0.008 last July 2008. This is a more than 70% drop in the stock's market value in just 13 months time. All of a sudden, the stock hit its ceiling price and was able to regain half of the market value that it lost in just a few days' time. The monthly chart of the stock above shows that the 0.008 level is an important area of support. However, with the stock climbing so fast, so soon, it immediately was testing its medium-term resistance at around 0.015 in just a couple of days' time after hitting a trough at 0.008. You can see in the weekly chart above that the 0.014 to 0.015 levels are a significant area of resistance for the stock. Obviously, the stock has held below these resistance levels right now and may possibly head back down to its lows.

In the short-term, the fact that prices formed a long black candle right after it has formed a long white candle is bearish. With so many people buying at the 0.013 to 0.015 level, all those people are currently stuck right now with drawdowns  of around 15 to 25%. Obviously, all these people would like to be able to sell their positions at breakeven, if they could. I don't think prices will easily drop back down to its previous low at 0.008, however, the bulls will first need to prove that it can hold above its psychological support at 0.01. At this point, the short-term momentum of the stock is still to the downside. Unless an aggressive buyer shows up, I'm afraid the bears might continue to put pressure on the bulls up to next week. But who knows? Maybe those that bought at around the 0.008 to 0.010 levels were able to sell near 0.015. If so, they might be tempted to buyback their positions near 0.010 already. I expect this stock to be range-bound for now between 0.010 and 0.012 in the short-term.

I sure hope all Tsupiteros who had positions in this stock were able to sell near the 0.015 level last week. For those who were not able to do so and are still holding on to your positions, I would suggest to sell as close to 0.013 as possible. Given the movement of this stock last week, I'll be damned if prices would still be able to climb back up to 0.015 anytime soon. For those who would like to buy this stock, you may want to buy it at the 0.010 level. I wouldn't be greedy though if I were you. Position-traders, on the other hand, are recommended to avoid 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.