Regarding the Morte D’Arthur

[youtube:http://www.youtube.com/watch?v=bpA_5a0miWk 450 300]

Quite possibly the “Best Music/Worst Video” combination of all time

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At the end of the Sir Thomas Malory’s Le Morte d’Arthur, the famed British hero King Arthur is transported back to an enchanted island to recover from his mortal wounds after the Battle of Camman  and perhaps be frozen in time for the next time England might need it’s hero king.

Some say he did come back– as Mick Jagger, or more likely the closer kin — Welshman Tom Jones– but that’s only idle speculation.  The important bit to remember here is that enchanted isle was called “Avalon, the Island of Fortune. ”   Some of you who are on The PPT may think sometimes that all of my picks have gone to a magical island to recover from their mortal wounds.  Perhaps they too will reappear someday when Chess or Rage or le Fly are having a bit of a dry spell.

That too may be idle speculation, but in the meantime, there’s a rare earth metal stock that I’ve been accumulating as of late, now to the tune of 30 kilotons, mostly in the low to mid $2 range.  It is of course called Avalon (AVL), and may finally be revealing itself as the font of good fortune I expected after many a day of bouncing around like a malfeasant pinball.

You’ll note in the chart below, that I marked an original consolidation point upon which I thought AVL might rest for a bit after rallying off it’s lows in October, hitting resistance at the old breakdown point (about $4) in early November, and then making a higher low in late November.

As the stock rallied back above that mid-consolidation line in early December, you will recall that I expected it to base there on the consolidation line.  Well that didn’t happen, at least not for very long, and the stock actually began breaking down again.  It eventually broke down below the “higher low” area all the way to the October lows before rallying once again on strong volume.   Note all that progress in the chart below:

Now the question begs — did we just experience a double bottom in these cursed rare earth metals?  If you look at REE, your answer might surely be “hells yes!”  Checking QRM, however, and you might consider the jury still in the anteroom.

What I can see, however, from the above chart is that we have some pretty helpful guideposts available.  If what we’re seeing on the past two high volume days has been the first two legs of the three white soldier candlestick pattern, we’ll see AVL‘s price burst above that consolidation line that so effectively served as our ceiling today.   Since this is a bullish reversal pattern, it should mean continuation after a bit of consolidation, so we might venture some additional buying in that case.

If however we do not get any follow through on the last two days momentum, we know that the consolidation line is acting as resistance.  If we really do have a double bottom pattern here, then we likely will not see another low below the most recent “DB” lows, and you’ll rather have a “rest,” followed by a final break of the resistance.  Given the volume of the last two days, I think that’s the more likely bet.

As an aside… my “Magnificent 7” 2012 picks, including Pick of the Year UPS, as well as AG, COP, DE, MON, PBR and RGLD, are up 5.9% collectively so far this year, and that’s not including dividends, which on some of those can be a significant sweetner.   MON is in the lead as far as top performers, with 12.5%, followed by AG and PBR with 8.5% each.  My two laggards are UPS and COP, with 0.4% and o.1% returns, respectively, thus far this year.  This does not include either stock’s phat dividends of course.

I’m going to be in and out the rest of the week, meeting with buyers, so I may be scarce, but will endeavor to visit at least in the evenings.   My best to you all.

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