Acadian Mining Corporation ADAIF

RE: Breakout potential Alert!!! , BGraham

[shortUSA2]

I don't think technical analysis is as relevant to LME charts as it is to individual stocks simply because the LME is tied so tightly to supply and demand fundamentals whereas a stock is ruled more by psychology.  It is the pyschological aspect that TA is concerned with.    While there is some speculative character to the LME, its chart is dictated largely by the producers and consumers of the commodity in question.   I would argue that the appearance of a head and shoulders on the zinc chart is explained simply by how the fundamental picture has played out over the last five years.   Look at the lead chart.   Pretty much everyone believes that current lead prices are not sustainable but the price persists at these levels because the supply is too inelastic to have an effect on the price.  If lead were a stock, it would have corrected long ago as the supply of stock (investors selling to take their profit) would have overwhelmed the buyers and produced a correction.    Come to think of it,  the perceived unsustainability of the lead price might be a factor in why people are reluctant to buy into ADA.   There is also a wide spread belief that zinc prices may be weak in the short and intermediate term, hence a lot of potential buyers of ADA are sitting on the sidelines.   If  ADA can show good margins on the current price of zinc, that ought to put these potential investors at ease and hopefully result in some buying.  I think the market is waiting to see what ADA's break even point is on zinc.   Right now we really don't know if they could still turn a profit if zinc dropped to a dollar.   I suspect they can but the market wants proof.