Market Taking A Breather

by Olivier on December 14, 2010

This is basically the only conclusion I can come up with right now. The last few days are best characterized as ‘churning’. The way I see it, the market needs a breather here in order to digest the recent advance. Combine that with the Christmas holiday season that is soon to kick in, it is difficult to see the market making huge moves. We could witness sell-offs on low volume but for now I think most traders are still underestimating the strength of this bull market. I see lots of bad news and so many people calling for a huge correction. The market simply shrugs it off and either moves sideways or marches higher. This could change, but for now the path of least resistance still seems to be to the upside.

That being said I am not expecting any fireworks and I am also going to reduce my posting frequency during the holidays. Most traders will take some time off starting next week and volume will drastically decrease, no need to overanalyze things during that time of the year. On to the charts and my portfolio positions:

  • LNG – Cheniere Energy: Today LNG showed first signs of life. I was hoping for a somewhat stronger close, but overall the stock is acting well. There are 3 trading days left for the stock to print a white weekly candle. If we see decent follow through, I would consider a close above 5.70 to be decent, we will have the situation I described a while back. The weekly chart will attract a ‘whole new set of buyers’. These will be ‘other time frame market participants’ basing their buy and sell decisions on weekly chart. That will be very bullish for LNG. We are not there yet. Today’s candle looks promising though. Another positive is that the up days show much more volume than the down days. Buyers are slowly getting back in control. The recent higher low and the fact the stock bounced back from the 5.00 $ level is also an encouraging sign for the bulls.
  • CNL.TO – Continental Gold: Not much to say. Volume is decreasing and so far the gap area is still providing support. A bounce from these levels would be constructive technical action. Let’s see if CNL.TO can manage to move up from here.
  • TMB.TO – Tembec: Stock needs more time here. Overall very bullish and constructive technical action. The CFO of the company recently bought some shares on the open market. Not much else one could wish for.
  • DNN DML.TO – Denison Mines: I see lots of traders waiting for lower prices to initiate a position as they start to see DNN as the go to stock in the Uranium sector. Strong stocks make it very difficult to enter. Let’s see how DNN treats those on the sidelines.
  • UEX.TO – UEX Corp.: Volume is completely drying up. This is bullish and indicates there is basically no selling pressure. If volume comes in, I would expect it to propel the stock to the upside. It sure looks like the stock is waiting for a catalyst to start moving up again.

Do not go where the path may lead, go instead where there is no path and leave a trail. – Ralph Waldo Emerson

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

Buenas noches!

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