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Large mining trucks haul waste rock away at the Copper Mountain Mine in Princeton, B.C. January 13, 2011. (John Lehmann/The Globe and Mail)

Large mining trucks haul waste rock away at the Copper Mountain Mine in Princeton, B.C. January 13, 2011.

(John Lehmann/The Globe and Mail)

Schizas’ Mailbag

Copper Mountain Mining not a shiny prospect Add to ...


What about Copper Mountain Mining?

Henry in B.C.

P.S. I am a Globe and Mail reader

Hey Henry,

Thanks for the assignment and congratulations on making use of the superior information available from The Globe and Mail!  I last reviewed the charts for Copper Mountain Mining Corporation on Feb. 3, 2012 when the shares were trading for $5.45. Judi wanted to know my thoughts on the stock.  What I was able to glean from the analysis was that resistance had formed along the 200-day moving average and that it needed to make a convincing move through $6.00 to signal a buy. Unfortunately the shares were not able to attract much buying and failed to break above resistance.

An examination of the charts will better inform any decisions regarding how best to proceed.

When the name of the company we are interested in is called "Copper Mountain Mining Corporation" it behoves investors to inspect the health of the underlying commodity. The three-year chart for copper explains some of the challenges the company has been dealing with. Back in February copper was selling for $3.79 while today it is at $3.41. What CUM needs is a good dose of higher prices for copper to give the shares a lift.

The three-year chart indicates that the inability to move through resistance in February got investors heading for the exits as concerns about a slowing global economy and operational issues at that mill became the dominate theme. What is evident is that the shares have been in a downtrend since May of 2011 when they traded at $8.00. In addition the inability to hold support at $3.00 could suggest a retest of support at $2.50. Finally you cannot ignore the resistance along the 50-day moving average that has held sway for the last seven months.

The six-month chart provides a close-up of the resistance along the 50-day moving average and the sell signal generated by the MACD in late June when the stock was hitting resistance at $4.00. Currently the MACD and the RSI are turning lower which would suggests you should expect more selling in the near future. CUM has a substantial deposit and will overcome their operational issues. What they are not in control of is the global economy and the demand for copper. As stated in February, until CUM can break above resistance it is not a buy.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

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