Chart Chat, page-928

I am more of an FA trader, but have been taking a larger interest in TA recently, which is obviously very handy for confirming trends. There's not much good to take away from this week's trading, but to me it doesn't appear time to panic just yet.



Starting from the ASX price query on Jan 20 - when news of the Itapitanga acquisition appears to have leaked - to the ASX aware query on Feb 20 (20 trading days, excluding the TH), there were 1.35 billion shares traded, or nearly 60% of the register, at a VWAP of 1.2c. This is the (quite considerable) support level for Itapitanga, as I see it.

The SP dropped below this support a number of times in late Feb-Mar, but always within the long-term trend lines. Since the second set of auger assay results were released on Mar 27, the support has been tested 10 times without breaking.

Some more numbers. Since those auger results on Mar 27, 1.47 billion shares (64% of the register) has changed hands at a 45-day VWAP of 1.45c. Since RC drilling commenced on Apr 30, the 24-day VWAP is 1.55c. Even with all the selling this week, the current 20-day VWAP is 1.5c. Basically, anyone who entered during this period (myself included) is down on average around 20%. Not fun to see on your screen, but, day traders aside, there are a lot of people with little reason to continue the selling at these levels.

The danger of course is CTM closed the week smack-bang on support and also sitting right on (or just outside) the lower trend line, leaving it precariously balanced. On the positive, unless there's something terribly wrong (or right), stocks rarely trade outside their bollinger bands for 3 consecutive days, and most that I've observed snap back sharply to normal levels after closing 2 days outside the bands, which CTM now has. The company has also promised strong news flow over June, which is typically incentive for people to hold (or buy).

If CTM were to close below support next week, then that would be alarming. But until that happens, I will rest easy over the weekend.