I am not a guru on technical trading but the fact remains many other investors DO put a great deal of confidence in studying the charts and therefore one can review the charts and get some notion of how the great unwashed hoard of retail investors may behave. The most obvious detail for the ECU chart is the downside gap left at 77 cents about a month ago.

Now that ECU has found a bottom and the presure on the short side appears to be abating, we may establish that gap to be filled as the first upside objective for the recovery. I have already stated my opinion that the fundamentals and news flow would suggest that ECU has some strong upside ahead. Also I believe the metals are going to recover shortly and provide a tailwind. The technicals may be the third strike for those who are short ECU right now. And once we get a short covering rally, then we could recover a hell of a lot of lost ground very quickly.

I still read a lot of commentary on various forums (including my own at Smartinvestment.ca) that kick sand at ECU on the basis of risks. My own view is that the risk profile for this company has just been greatly improved once the acquisition of the new mill closes. People are entitled to their own opinion and investors are free to yap however they see fit. But my view is the producers are soon to become the go-to vehicle to ride the PM bull. Metals are becoming more difficult to buy and the premiums are off the charts. However, one could buy ownership in solid producers of the metals and find their investment enhanced as the operating costs are sharply lower in this deflationary episode of the world economy.

Just for starters, look up the price of fuel lately. For a company like ECU, the ore must be trucked about 15 minutes each way to the mill from the mine. The scoop trams and underground machinery are also dependant on cheap energy to be efficient How much stronger is the bottom line for ECU going to be with the current fuel prices compared to the last time ECU was in commercial production? This same fact applies to all producers and that is why they will become much more attractive to investors as metals prices climb.

All of the cost savings will go right to the bottom line. And that money can be used to pay down and service debt, plus allow surplus funding for additional exploration and development. I do not think ECU will stay below a buck for long once that mill is operational. My guess is that the technical picture will prompt traders to become bullish too.

cheers!

mike