Manulife Financial Corp looks to be serving up a cup of profit

Oct 1st, 2012 – 1 Comment

From its current value the shares could add $3.00 on an advance.


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Hello,

I was looking into MFC on Bing and noticed your past comments. My father gave me this and requested I put it away and forget about it. He received shares as a John Hancock policy holder at zero cost.

The value was over $30,000 at its peak. Today, around 10K+.

I am perplexed as to a course of action? Any feedback appreciated.

Thank you,

Barry

 

Hey Barry,

Thanks for the assignment. Manulife Financial Corp. (MFC TSX) has suffered with the entire insurance industry as low interest rates have wreaked havoc with their investments. When I last examined the case for MFC on April 18, 2012 when the shares were trading for $13.28 it was clear that there was still a downtrend in place and that it was not a buy and hold stock. Resistance was identified at $14.00 and it was advised to watch for how the stock traded ahead of the release of Q1 results on May 3, 2012. Unfortunately the stock could not overcome resistance at $14.00 and retreated on the release of Q1 results hitting a 52 week low of $10.18 on July  27, 2012. From the lows there was an advance until resistance came in at $13.00.

Currently the downtrend identified in earlier posts is still in place and investors need to proceed with caution when dealing with stocks that are struggling with sector weakness. At the last Federal Open Market Committee meeting the U.S. Federal Reserve declared that they will be keeping key interest rates at generational lows through the middle of 2015. As go interest rates so goes the insurance industry.

An inspection of the charts will provide needed insight on how things are progressing with MFC.

 

 

The three-year chart illustrates the downtrend that has been in place since 2010 with no apparent reversal of the trend. At best it appears that there is a range bound pattern that has emerged with support at $10.00 and resistance at $14.00.

 

 

 

 

 

The six-month chart outlines what appears to be a cup and handle pattern which could lead to a breakout if MFC can move up and through $12.50. From its current value the shares could add $3.00 on an advance. A $3.00 gain at this point is of little comfort after the haircut you have taken but as we say in my household – take what the road gives you.

 

Make it a profitable day and happy capitalism!

Categories: Insurance
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