Look before you leap

Apr 16th, 2010 – Comment

The idea of a company that can produce solar panel quality silicon is great but the idea is no longer validated by the charts.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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tim

Hi there,

Whats happening with Timminco long term? Shares have dropped since I bought.

Nancy

 

Hi Nancy,

Timminco Ltd. ( TIM TSX) has been in a sell off for quite some time.  I just addressed the core issues that are relevent  to this case in a presentation  to the  Oakville Chapter of  the Canadian Society of Technical Analyst . Idea generation and validation are central to reducing risk and enhancing opportunity when considering an investment.

When we are attracted to a potential investment it behooves us to conduct some due diligence to at least have a fighting chance of making a profit. The first level of validation of a potential investment is to get the direction right. In the dot com days people were jumping into the market without any idea what the companies that they were buying did. But at least they were buying shares  that were going up! 

 tim1

I’m not sure when you bought the shares of TIM but the three year chart provides a good reason not to. The best time to buy a stock is when its going up and there is a strong trend to support the advance. Nothing on this chart suggests that the downtrend in place since the summer of 2008 was about to reverse. Yes there was a spike in the fall of 2009 but it was not sustained.

In addition the stock couldn’t hold onto support at $1.25. When I see a chart like this I ask myself is there any reason to spend more time looking into the background of the company. Not really. This train is not going in my direction. It doesn’t matter that TIM is a producer of silicon for the solar panel industry or anyother  fundamental detail. The price of the stock has all that information in it already and its been proving a sell signal for a long time.

tim3

The three month chart is also not providing an endorsement for TIM.

 

The idea of a company that can produce solar panel quality silicon is great but the idea is no longer validated by the charts.

 

MAKE IT A HUGE WEEKEND AND HAPPY CAPITALISM!

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