This is a tough week to give mentions as the direction of the stock indexes is "up in the air" and probabilities across the board, in either direction, are no better than 50-50. Nonetheless, I do believe the drop in commodity prices may have reached a level of support from which rallies can occur without being affected by the indexes. All mentions this week will be stocks associated with commodities that are at important or major support levels. It is likely that by Tuesday afternoon, these stocks will either be showing gains or the stop losses triggered. Nonetheless, attractive risk/reward ratios are seen in all mentions.

KGC (Friday Close at 15.74)

KGC is a gold mining company that due to the precipitous drop in the value of Gold and commodities, has fallen 40% in value over the past 3 weeks. Even though Commodity prices have dropped, KGC now finds itself back down to prices the stock was trading at in 2006, prior to any inflation concerns. It is likely that the stock will find strong support at these prices, even if inflation is not a concern any more. In addition, the GDX index (Market Vectors Gold Miners) has also reached levels of strong support seen prior to the rise in the price of precious metals. Having both the index and the stock at strong levels of support suggests this could be the end of the decline.

On a weekly closing basis, support is strong between 14.71 and 15.94. Going all the way back to 1997, that level has been pivotal to the stock. In April 1997 the stock had a weekly low of some importance at 15.75, on October 1997 the stock had a major high at 15.94, and again in April of last year a 5-month high was made at 14.71. This last high was the level from which the stock broke out and generated a rally to the all-time high at 26.94. Support is decent as well, between 15.39 and 15.45 from a previous important intra-day high on Sep06 as well as from a breakaway gap between 15.45 and 15.29 that has been open since October of last year. Strong support should be found at the previous-to-the-breakout weekly high close at 14.70. Resistance is non-existent until the 18.00 to 18.85 levels are reached. Major resistance will be found at 21.30 where an important previous high is located. In addition, strong resistance will also be found between 20.00 and 20.80 where 100 and 200 day MA's are located as well as the 20 and 50 week MA's.

It is evident that KGC has dropped back to pre-inflation-concerns level and therefore the stock should begin to see some strong buying coming in. It is important to note as well, that even though inflation concerns have ameliorated over the past few weeks, inflation is still much higher than it has been over the past 10 years, and not likely to come down much more until the Fed gets into a tightening program, something that may not happen until 2009.

Purchases of KGC between 15.39 and Friday's closing price of 15.74 and using a stop close only at 14.60 and having an objective of 20.81 will offer at least a 5-1 risk/reward ratio.

My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).

JRCC (Friday close at 32.45)

JRCC is another stock that falls under the commodities/energy umbrella as it is a company that mines coal. JRCC had a meteoric rise this year, starting in March when it broke above an 18-month high at 15.20 and culminated in June with a high at 62.83. Since then, the stock has dropped over 50% in value and has now reached a level of support that could hold. A level from which the stock could generate at least a short-covering rally.

JRCC was upgraded to a buy this past week by a Raymond James analyst and considering the chart action seen recently, with an important support having held and in the process of being tested, seems to be at the right price and perhaps at the right time for a rally.

Support intra-day is decent between 31.16 and 30.83. The 31.16 level was the correction low seen when the stock rallied from $20 to $40 in May. In addition, the stock dropped down to 30.83 on Tuesday, seemingly breaking below the 31.16 previous low, but then reversed itself and gave a failure-to-follow-through signal of consequence. Underneath 30.83 there is no support of consequence until the $20 is reached. On a daily closing basis, resistance is decent at 35.53 (20-week MA as well as a previous high close) and then again at 36.98. Stronger resistance will be found between 39.35 and 40.83. At those levels you run into a previous intra-day high of consequence at 39.35, two daily closing highs at 40.77 and at 40.83, as well as the 20-day MA.

JRCC is an industry (energy, metals, commodities) that has been pummeled as of late, much of which was caused by momentum rather than fundamental news. The stock is now at a level of support that should generate some speculative buying and from which a rally could occur. In addition, the risk/reward ratio is very good and the probability rating better than 50-50.

Purchases of JRCC between 31.16 and 31.91 and placing a stop loss at 30.73 and having an objective of at least a rally to 39.35 will offer a 7-1 risk/reward ratio.

My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).

TRA (Friday close at 45.32)

TRA is a company that engages in the production and marketing of nitrogen and methanol products for agricultural and industrial markets worldwide. The stock has been in a strong and clearly defined up-trend since Nov06 when the stock broke above the $10 level. The stock recently hit a high of 57.64. The stock price has come down recently due to the drop in commodity prices as well as a failure-to-follow signal the stock gave when new all-time highs were recently made. Nontheless, the weekly up-trend since Sep06 has stayed consistently above the 200-day MA and since the stock is back at that line, needs to be considered for a purchase that offers high probability of success.

Support is very strong at the recent intra-day low of 43.38, which is also the same price at which the 200-day MA is presently located. On a daily closing basis, though, support is considered major at 45.16-46.18, as there have been 13 times in the past year that level has either been the high or the low closing price. In addition, the last 7 times have all been daily closing lows between 45.16 to 45.65, giving that level the tag of "major support". Resistance is strong up at the $50 level with 7 high daily closes over the past year between a low close of 49.36 and a high close of 50.99. Resistance is also found at 52.42 and at 53.48, as those two were clearly defined intra-day highs within the trading range. Major resistance is up at the $55 level with the all-time high daily close at 55.72. On the weekly chart the stock does show a double top at 54.16.

It is evident the stock has been trading sideways between $45 and $55 for the last 8 weeks, with small recent forays down to the low $43's to test the 200-day MA. It is unlikely, unless markets factors dealing with commodities have changed completely, that the stock will break the strong up-trend on the weekly charts. Trading so close to the 200-day MA, which has not broken for the last 2 years, offers a good risk/reward ratio trade with clearly defined support and resistance levels and a good probability rating.

The stock may have already tested the previous low at 43.39 with Friday's drop down to 43.94. On Friday, TRA was able to close above the major daily closing support at 45.16 and also closed above the 100-day MA at 44.75, where there is also some decent intra-day support. It seems unlikely the stock will break below the 100-day MA at 44.75 unless the stock is in problems and is going to break the 2-year 200-day MA.

Purchases of TRA between 44.75 and 45.07 and placing a stop loss at 43.29 and having an objective of a rally up to 52.42 or 53.48 will offer a 4-1 risk/reward ratio. My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).

RIO (Friday closing price 25.75)

RIO is a Brazilian stock that mines ore. During the last two months the stock has seen a strong drop in price due to a falling Brazilian stock market and a general decline in the price of commodities. In addition, RIO is growing and rapidly expanding and recently had an additional stock offering to raise capital for new acquisitions. The stock offering was fully subscribed but at an average price of around $28.70-$29 per share. That stock offering was the main cause for the recent drop in price.

RIO had a positive earnings report this past week, reached levels of major chart support, and with the price of precious metals likely reaching levels of strong support (see KGC mention above) the stock seems to be a good purchase at these prices. In addition, RIO is a large company that is rapidly becoming a world power and its likely that over the longer term the additional capital that was raised for future acquisitions, will help the company accomplish much higher valuations.

On a weekly closing basis, support is strong between 25.72 (100-week MA) and 25.97 (major previous weekly closing high). Intra-day support is very strong at 24.00 and decent at 25.20. On a weekly closing basis, no resistance is found until 31.63, where the 50-week MA is located, and even then that resistance is considered minor. Strong resistance will be seen up at the 50-week MA currently at 33.60. On a daily closing basis, resistance is found at the most recent high daily close of 30.71. Above that level there is no resistance of consequence until the 33.60 level is reached. Minor resistance, on an intra-day basis, is found at 27.09 (most recent high).

The stock has been under strong selling pressure as commodity prices have dropped over the last few weeks. In addition, the stock offering diluted the stock and created new selling. Nonetheless, the additional income is being used to expand (not to solve economic problems) and therefore higher valuations of the stock price are to be expected in the future. The better-than-expected earnings report should also add some support to the price.

It is possible (but not probable) that RIO could test the 11-month low at 24.00 this coming week. All commodities related companies have been under strong selling pressure, and that pressure may continue for the first part of the week. Some of that will depend on what the indexes end up doing on Monday. Nonetheless, in this industry chart support is strong across the board and by the end of the week it could become reality that major lows have been set and that rallies are forthcoming.

Purchases of RIO between 25.20 and 25.75 and using an intra-day stop loss at 23.90 or a stop close only stop loss at 25.39 and having an objective of at least a rally up to 33.60 will offer a risk/reward ratio of at least 5-1.

My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).