Taseko Mines' High Volume Breakout

“Trend reversal” is the theme of the month. The January effect has pushed hundreds of microcaps above last month’s resistance, shattering long-term downtrends.

But not all breakouts are the same. Virtually every technical resource will confirm that high-volume breakouts are much more likely to stick than big moves on tepid volume.

Copper miner Taseko Mines (Amex:TGB) shows exactly what I want to see in a January effect breakout. TGB moved substantially above both its December highs and the 50-day moving average on more than twice average volume.

TGB will probably retrace a little because it moved so fast. I’ll consider buying around 0.78-0.80, a point where the confluence of the 50-day MA and the prior breakout should lend support.

Like most “January effect” moves, this one wasn’t prompted by company news. Instead, TGB looks like a classic case of seller exhaustion, both in TGB shares and in copper itself.

Bottom line: As long as TGB stays above $0.75, the breakout is intact. Before the end of January, I’d like to see a break above the next resistance level at $1.23.

DISCLOSURE: No position.