Braskem (BAK)

Company

"Braskem, a world-class Brazilian petrochemical company, is the leader in the thermoplastic resins segment in Latin American, and is among the three largest Brazilian-owned private industrial companies. The company operates 14 manufacturing plants located throughout Brazil, and it has an annual production capacity of over 6.0 million tons of petrochemical products." (company website)

BAK 3-month stock chart

Buy

10-Aug-06. Braskem has been on a downtrend for most of the past year (see sidebar), but it is showing signs of turning around. The 10- and 21-day moving averages have turned up, and the 50-day moving average seems about to turn. Market Edge has identified BAK as an "early buy" based on technical analysis. We'll see.

  • Price momentum (PPO) — picking up sharply
  • Trend (ADX) — still below threshhold (20) but strengthening, and buying pressure (+DI) has crossed above selling pressure (-DI)
  • Money flow (CMF) — shifted from flowing out of the stock to flowing in
  • Relative strength (RSI) — picking up steadily
  • Volume — three recent up-days with higher than average volume.

Sell

gain Bottom line
10%

30-Aug-06. Braskem shot up at the open, supposedly on news that the company will make a "cash tender offer for any and all of its outstanding $275 million principal amount of 12.50% notes" (Dow Jones newswire). This news was available yesterday, so I'm not sure why the effect was delayed, if that is, indeed, the cause.

At any rate, I have seen to many of my holdings reach a nice level of profit, only to slip away. So, I put in a order to sell if trading fell to $12.75, which it did. The chart still looks strong, but I have become a firm believer in the wisdom of the "bird in the hand" principle in this volatile market.

BAK 1-year chart
BAK 1-year chart