Chemtura (CEM)

Company

"Chemtura Corporation .... [is] a leading global supplier of plastic additives, including flame retardants; a leading manufacturer of pool and spa products; a global leader in seed treatment and miticides in the agricultural market; the largest component supplier to the lubricants industry; and a top global producer of urethane polymers." (company website)

CEM 3-month stock chart

Buy

When CEM got slammed a while ago, I bought shares through an automated trade at a much lower price than I had expected to pay. Although I would have withdrawn the order if I had known about the slamming, I was stuck with it. To my great amazement, the price quickly climbed back up to where it was before and then above. I sold, expecting a pullback and wanting to lock in my gains. Well, CEM did pull back, but only to the 1-month average.

I conclude that all the whipsawing was an over-reaction and there has been the equivalent of a three-week consolidation period above $9.40. It seems ready to climb some more: all the indicators have ticked up. I'm ready for another go.

  • Price momentum (PPO) — leveled after the pullback
  • Trend (ADX) — selling pressure (-DI) is falling and buying pressure (+DI) is rising; the ADX will soon turn back up
  • Money flow (CMF) — fell off during the pullback, but is still flowing in
  • Relative strength (RSI) — increasing again after weakening during the pullback
  • Volume — average is steady

Sell

loss Bottom line
-2%

At the end of 2006, I raised the stop-loss activation price to $9.48 to protect against any sudden dip in price. Yesterday for CEM was a "deliberation day" — closing about where it opened but swinging both ways during the session. The much-longer top tail of the candle was a rather bearish sign, and today CEM dipped low enough to trigger my stop-loss order.

The uptrend appears more or less intact (see sidebar), but there is often a let-down after the first of the year, and I will want to see what happens next with this stock.