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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/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/John Lehmann/The Globe and Mail)

Schizas' Mailbag

Copper Mountain Mining Corp needs to break past $6 Add to ...

Hi Lou,

Look at the volume on CUM-T and the slide in the stock price. There seems to be another round of insider selling. What do you think of this stock?



Thanks,

Judi



Hey Judi,

Thanks for the assignment. Copper Mountain Mining Corp. had a great run as it developed its deposit and built their mine in Southern British Columbia. I think what you are seeing is a typical investor response to an organization having met some of their objectives. Investors take profits when they think that all the currently available good news is already baked into the stock price. There are a number of factors to consider when examining the case for CUM, not the least of which is the price of copper itself. A review of the charts will highlight some of the details that you should consider going forward.

More related to this story

The one-year chart for copper provides some of the answers as to why the stock has sold off. As goes copper so goes CUM. The price of the commodity hit resistance at $4.50 in July of 2011 and then broke support in August. There has been some recovery in the price of copper as it bounced off of $3.00 in October. The three-month up move seems to have met resistance against the 200-day moving average and the RSI and MACD are both suggesting a pullback from these levels.

The three-year chart for CUM outlines the resistance at $8.00 the shares tested but could not break above in the spring and summer of 2011. The MACD generated a sell signal in early July that saw the stock fall back to the October low of $3.24. A comparison of the chart for copper provides ample evidence of how the shares and the commodity move in lockstep. The stock caught a bounce off of the lows and enjoyed a nice advance until it met resistance against the 200-day moving average.

The MACD on the six-month chart has generated some great buy and sell signals for traders. Make sure to consult this indicator when making decisions on the stock. The MACD currently looks to be turning up and the shares appear to be holding support along the 50-day moving average.

The 2012 plan for CUM is to ramp up production to between 85 and 90 million pounds of copper. The estimates are that at target production levels the mine will be operating for about 17 years. I like the story but what is needed is a convincing move to the upside. If the shares can make a move through $6.00 it has little resistance back to $8.00.



Make it a profitable day and happy capitalism!

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