Thomson Reuters Corp. threatening a retest of support

Oct 24th, 2012 – Comment

What also has me putting a caution flag on the track is the descending triangle that is forming which makes a hold at $27.50 even more important.


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Hi Lou,

Was wondering if you could run the charts for Thomson Reuters to see if now is a good time to get in.

Thanks,
Susan

 

Hey Susan,

Thanks for the assignment. I examined the case for Thomson Reuters Corp. (TRI TSX) once before on December 12, 2011. Harry wanted to know how best to proceed with his investment in the stock given his reluctance to sell. The analysis that was presented outlined a number of factors that he was advised to consider in making his decision. One factor in play was the fact that new management was just put in place and it might be worth waiting to see if the new broom would sweep clean.

In addition at the price of $27.32 the dividend was providing a yield of 4.6%. Finally the MACD and RSI were turning up suggesting that a trade might be setting up. Retrospectively that is what happened. The stock moved in an up channel until it hit resistance at $30.00 in May of 2012. From April to mid August the shares had been moving sideways with support at $28.00 and resistance at $30.00. Unfortunately since mid August the shares have breached support at $28.00 and established a gentle down channel.

A review of the charts will provide some guidance as to a potential entry point at this time.

 

The three-year chart indicates that at least the horrible downtrend that started in June of 2011 has been broken but I am not sure that is enough reason to be a buyer. The shares seem to be struggling with resistance along the 50- day moving average and a death cross surfaced as we came into October of 2012. Also worth mentioning are the buy and sell signals generated by the MACD since late last year which provided investors with good entry and exit points for TRI.

 

 

 

 

 

The six-month chart provides greater focus on the buy and sell signals generated by the MACD. Currently the indicator is turning down suggesting that the stock might have to retest $27.50. Of greater concern is the fact that if the shares cannot hold support here and fails to hold at $26.00 it might have to retest support at $20.00. What also has me putting a caution flag on the track is the descending triangle that is forming which makes a hold at $27.50 even more important.

 

The company is scheduled to report Q3 on October 30 so it would be prudent to get through that gateway before committing your hard earned capital.

 

Make it a profitable day and happy capitalism!

 

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