Bucyrus is seriously off the highs

May 7th, 2010 – Comment

Now that we broke support at $55 we will have to see if BUCY can get its chin back over the bar or if it will have to test support at $50.


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Bucyrus

 

Lou,

BUCY has showed substantial growth, yet seems to have some static in the ranks, based on retrospective strides do you think this will this impact the current momentum?

Pat

Hi Pat,

Thanks for the assignment. Bucyrus International Inc. ( BUCY NASDAQ) is a leading producer of mining equipment serving the needs of companies such as Suncor Energy, Xstrata, and Newmont for huge drag lines and trucks. The advance that started in March of 2009 has stalled and the shares of BUCY are now testing support and investors nerves.

bucy

The three year chart  illustrates that great move from the lows but the momentum has slowed taking the stock lower. Trees don’t grow to the sky and stocks don’t go up forever. BUCY hit resistance at $75 and didn’t have enough in the tank to get over the hump. The stock breached support on its 50 day moving average in late April and tested support on the 200 day moving average yesterday as the market reacted to the ” fat finger” trade that sent markets for a severe one day drop.

 

 

bucy2

 

 

The six month chart provides a close up of the recent trading action in BUCY and the MACD signaling the sell off  on April 15, 2010. The RSI is currently indicating an oversold situation that needs to be monitored for signs of strength or weakness. Now that we broke support at $55 we will have to see if BUCY can get its chin back over the bar or if it will have to test support at $50.

 

BUCY provides a classic example of a company doing a great job on the micro side of the ledger but having no control of the macroeconomic environment. When the sovereign debt of the PIIGS  nations, especially Greece , starts to stir up concern about the strength of the global economic recovery you can expect selling to come into the markets. We have seen the major stock indices giving up gains for the last number of weeks as capital preservation became the focus of investment management.

If you are going to panic its always better to panic first!

Happy Capitalism!

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