Hanfeng Evergreen Inc. caught in a sell off.

Feb 11th, 2011 – Comment

Given the current environment you would be best served going to cash and perhaps looking to get back in at lower levels if it holds at $4.00.


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Hi Lou,
I have held Hanfeng  for a couple years and it never seems to go up should I hold or sell?
Your help is greatly appreciated.

Jenny

Hi Jenny,

I last posted on Hanfeng Evergreen Inc.( HF TSX) on March 5, 2010 for Jordy. At the time it was clear that the stock was meeting resistance at $8.00 and Jordy was wondering if he should buy in anticipation of higher fertilizer prices. I advised that the best strategy would be to wait and watch for a breakout. Unfortunately HF didn’t breakout and in fact it broke down taking the stock lower. The charts will tell us what has been and what may be.

The three year chart depicts the breakdown that started with a double top in April of 2010. In early May HF reported its Q3 results which missed the street throwing coal on the decline and taking the stock below support at $7.00.

The stock caught a bounce off support at $5.75 in June – July of 2010 and ran up to $$7.25 but  the advance was short lived.  On November 9, 2010 the stock had another breakdown on Q1 2011 results that once again disappointed. Since the double top in April of 2010 there has been a well established downtrend established. You fight the trend at your peril and right now the trend is down.

The six month chart illustrates the sell off in early November and the bounce off $4.90 in mid December. The advance stalled on resistance along the 200 day moving average and HF is now retesting $4.90.

Before the open this morning February 11, 2011 it was announced that the CFO of the company had resigned. I  suspect that the stock will open lower.  At this point I would say that the best outcome would be for HF to retest the lows at $4.00.

Given the current environment you would be best served going to cash and perhaps looking to get back in at lower levels if it holds at $4.00.

MAKE IT A MASSIVE WEEKEND AND HAPPY CAPITALISM!

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