[caption id="attachment_775" align="aligncenter" width="500" caption="Teck Cominco Ltd."][/caption]
[caption id="attachment_776" align="aligncenter" width="500" caption="Commodity Index"][/caption]
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!
Downside: Same reasons why TCK has dropped from \$30 to \$5. Possibility of defaulting on massive loan.
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.
: http://traderpau.files.wordpress.com/2008/11/2008-11-17-tck.png : http://traderpau.files.wordpress.com/2008/11/2008-11-17-dbc.png