BOUGHT +2 TCK 100 NOV 08 5 CALL @1.00
Teck Cominco Ltd.
Commodity Index
Just a plethora of horrible news for TCK lately. Last week on 11/11, Financial Post published an article about it. TCK gapped down on 11/12. Even the Motley Fool has an article titled “What the Heck, Teck?”
TCK share price seem to be settling in $5 – $6. So why the heck am I long now? Ignoring the hypes, the fundamentals of TCK still stand. See the Motley Fool article. It has $2.7 cash/share and 0.17 debt/equity ratio. Granted, it took on $9.8 billion of debt recently, about 4 times its current market cap.!
The technicals though, are looking good. On the daily chart, the VW-MACD is showing a positive divergence. The CO has reached an unprecedented low and is just heading back up.
Furthermore, the commodities are showing signs of a positive divergence too.
Upside: In addition to the above, Max Pain is at $30 ($10 for CBOE data) for November! Yes, $30!
Resistance: $6
Downside: Same reasons why TCK has dropped from $30 to $5. Possibility of defaulting on massive loan.
Support: $5
Bottom line: Max pain at $30 when we’re just below $6! TCK is a diversified miner, a value producing company. TCK and ABB are now my top choices in this struggling economy.
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