Tembec TMB.TO (TSX) Bullish Cup And Handle Accumulation Pattern

by Olivier on November 2, 2010

My most recent portfolio addition being Tembec – TMB.TO I thought I’d write about TMB.TO today as I haven’t written anything about the stock and the paper sector yet. The reason why I originally bought in was the very bullish cup with handle formation. The bullish pattern is still very much at play and valid. As you can see in my chart annotations, the recent consolidation pattern has ‘serious accumulation’ written all over it. Whenever the stock opened down it ended up getting bought aggressively. This resulted in all the recent candles being white candles. Odds for this to be accumulation as opposed to being distribution are extremely high. The stock has been trading below resistance at 2.35 and kept building up pressure. It has now closed at exactly that level which I consider to be bullish action as price doesn’t get rejected anymore. I expect a breakout to the upside to be imminent. If the market cooperates I see the stock testing its recent highs around the 3.00 Dollar price target area pretty soon.

Tembec TMB.TO TSX Pulp Paper Forest Bullish Accumulation Pattern Technical Analysis Stock Price Chart Target

Up-to-date TMB.TO – Tembec chart on my public list.

Tembec is clearly not a crowded trade, that’s why I like it a lot and have recently added to my position. I also added to my DNN – Denison Mines position as both are behaving exactly as I would expect strong stocks to behave. Tembec has almost immediately validated my entry rationale and is showing me a profit. The technicals look great and the stock is acting well. I am simply playing the odds here. Long-term readers know what I like to say in these kind of situations: ‘Act accordingly’.

www.tembec.com : Tembec is a leading integrated forest products company, with operations in North America and France. With sales of approximately $2 billion and some 6,000 employees, it operates over 30 market pulp, paper and wood product manufacturing units, and produces silvichemicals from by-products of its pulping process and specialty chemicals. Tembec markets its products worldwide and has sales offices in Canada, the United States, China, Korea and Japan. The Company also manages forest lands in four Canadian provinces in accordance with sustainable development principles and has committed to obtaining Forest Stewardship Council (FSC) certification for all forests under its care.

Believe those who are seeking the truth. Doubt those who find it. – André Gide

My public list with all my charts can be viewed here:

Buenas noches!

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