Technicals | Jun 12 2014
Bottom Line 11/06/14
DailyTrend: Up
Weekly Trend: Up
Monthly Trend: Up
Support levels: $59.01 / $58.10 / $55.00
Resistance levels: $60.88 / $66.29 / $97.30
Technical Discussion
Macquarie Group is a leading provider of banking, financial, advisory, investment and funds management services. It operates as a non-operating holding company (NOHC). The company’s products and services include asset and wealth management which is engaged in the distribution and manufacture of funds management products. For the fiscal year ending 31st March 2014, interest income decreased 1% to A$4.61B. Net interest income after loan loss provision increased 29% to A$1.53B. Net income pertinent to common stockholders increased 49% to A$1.17B. Broker / Analyst consensus is currently “Hold”. The dividend is presently 4.3%.
Reasons to buy:
→ Recent results were robust helped by favourable conditions in energy markets.
→ The pay-out ratio over the past five years has been at or above guidance.
→ The stock is in a long-term uptrend.
Despite the broader market struggling for traction MQG has continued to show resilience. We took a look at the weekly chart last time which showed that recovery highs (and therefore resistance) had just been overcome. The daily chart shown here shows a sideways consolidation above old resistance/new support. This doesn’t always transpire though it’s uncanny how often price comes back down to retest or consolidate above old resistance. Over the short term a small ascending triangle has formed which is also a bullish proposition. It could be that the lower boundary of the pattern needs to be tagged one final time before the trend continues. However, it isn’t a prerequisite to higher prices so we need to remain focused on the upper trend line of the triangle which is the bullish trigger. The only caveat is bearish divergence though importantly it has yet to trigger. If it does trigger further consolidation is likely going to be the end result although this would still be positive in regard to our wanted leg higher albeit it would be further down the line. One thing we don’t want to see is the new line of support penetrated or we’ll have to move back to a neutral stance – at least over the short term.
Trading Strategy
“…For the moment it’s one to monitor only although a sideways consolidation over the coming weeks will be viewed positively…” The consolidation pattern means a low risk entry is available. Buy following a break above $60.88 with the initial stop placed just beneath the line of support at $57.99. At this stage there is no set target zone meaning we’ll be using a trailing stop to manage open positions. A break beneath the initial stop immediately invalidates the pattern giving reason to cancel standing orders.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
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