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CUP WITH HANDLE


Consolidated Ecoprogress Forming A Cup Without A Handle

05/27/05 02:55:42 PM
by Koos van der Merwe

As the world faces a growing landfill crisis, there is increased public awareness that if life on this planet is to be enjoyed for years to come, we need to conserve and preserve our limited resources.

Security:   CES-V
Position:   Accumulate

The company has been around for many years, with a flushable sanitary pad and liner called Flushaway. It reached a high of $1.07 in July 2000, but by December 2002 the price had fallen to $0.05. The company looked as though it was another Vancouver venture play with no future. Then in March 2004, the company appointed John Banks as president. Banks is known for his ability to turn companies around, and his reputation influenced investors to the extent where within six weeks of his appointment, the price jumped from $0.04 to $0.48 by June 2004. The price then moved sideways between $0.23 and $0.44 before falling to a low of $0.07 by December 2004. With the price at this level, the company entered into an agreement with Syndicated Capital Corp. of Vancouver, BC, to become its investor relations counsel. The product packaging was redesigned, and the share price started moving up slowly and is, at the time of this writing, at $0.24. Is the share worth a buy?

Figure 1: Consolidated Ecoprogress Weekly Chart
Graphic provided by: AdvancedGET.
 
Looking at the weekly chart from a technical perspective (Figure 1), we can see how a saucer formation has formed. A saucer is defined as a formation where the price has reached bottom, and is now moving up. The "saucer" can develop into a cup and handle formation, should the price consolidate and retrace downward before moving up to break a strong resistance level. In the daily chart in Figure 2, I have shown a resistance level at $0.28, which could be the start of the handle formation. Volume has been above average as the share price rose, a sign of strength, so it is possible that the $0.28 resistance level could be penetrated. If this occurs, the target for the share would be $0.52 (0.28 - 0.04 = 0.24 + 0.28 = 0.52). The stochastic indicator is suggesting an overbought level, so a consolidation could start at this level to form a handle to a cup.

The daily chart in Figure 2 does not add much to the weekly analysis. It shows the extent of the saucer formation from September 2004 to the present. The relative strength index (RSI) shown also suggests an overbought status, and that the price could now fall. I have also shown how volume fell as the share price fell, a sign of strength. Whether this volume strength will carry forward to the future will be shown over the next few days. Do note that the last rise to $0.26 was on lower volume. The candlestick pattern is a long white bullish engulfing pattern, a pattern that prices advanced significantly from open to close during the day under strong buying pressure. The candlestick pattern of the last two days have formed a bullish engulfing pattern. This is a bullish reversal pattern that marks a potential change in trend. However, its reliability is not very high and it does require confirmation

Figure 2: Consolidated Ecoprogress Daily Chart
Graphic provided by: AdvancedGET.
 
Finally, Figure 3 is a point and figure chart with the parameters 0.01 and a three-point reversal of the close. The chart shows how a buy signal on a triple top was given at 0.12. This also suggests a target of $0.30, calculated as follows. Counting the lines horizontally, there are 6. The calculation is then 6 x 3 (point reversal) x 0.01 (price per square) added to the break out level. (6 x 3 x 0.01 = 0.18 + 0.12 = 0.30.)

Figure 3: Consolidated Ecoprogress Point & Figure Chart
Graphic provided by: MetaStock.
 
Consolidated Ecoprogress is a share that is being promoted extremely well to the public. The product sold by the company is environmentally friendly, with outstanding packaging. Should you buy the share at this level, the possibility of doubling your money looks good. I would suggest a buy on any pullback, or to be more conservative, wait for a handle to a cup to form, with a break above the resistance level that will develop.



Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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Date: 05/29/05Rank: 3Comment: 
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