Active investors and traders will remember 2011, the Philippine year of mining. Everything with something to do with mining shot-up so crazy millionaires were made. Then mining crashed in 2012, and it took 2 whole years for mining to boom once again. People may even argue 2014 is the real year of mining. Whether or not mining still has room to run up, is not for me to say; for now, let’s take a look at one of the high flyers from 2011.
Lodestar Investment Holdings Corporation doesn’t have any operating business. It has 50M in total assets and 50K in total liabilities. It also has an agreement to merge with ABACOAL, the holder of a coal mining right for 7,000 hectares in Surigao. Whether or not the deal will push ever, we non-insiders we’ll never know. So here’s a chart to show a possible trade taking place:
Point A shows price hitting lows for 3x around Php0.60. The price rose from this area for 3x as well, showing there is support at this level. Support is determined as the area where there are many buyers gathering shares at that price.
Point B gives us the RSI picture. As a general rule of thumb, RSI follows price. If price forms new highs, RSI forms new highs. If price forms new lows, RSI forms new lows. RSI formed a low at the same area where price formed 3 lows. From here we see RSI is confirming price movement.
Point C may be the key to the current price action. Generally, MACD, as an indicator of movement, should also be following price, however as we’ve seen, the 3rd low of the MACD is much higher than its second low. Whereas price formed the same low at these areas. This is called a bullish divergence, when MACD separates from price, or when MACD forms a higher low when price forms a lower/same low.
Trading Strategy:
Buy: 0.64
Sell: a portion at 0.90, the rest based on further action
Cut loss: 0.58
Win loss: 0.26/0.6, roughly 4:1
This is neither a promotion to buy/sell. I have no shares here and it looks like I won’t be able to trade given my low cash position.
The Manila Operator 