I have read your January 2013 comments regarding Norbord . I bought it recently at approximately $33.00. Now it is trading around $28. Do you think it is a good buy.
Thanks for the assignment. This will be the second time that I undertake a study of Norbord Inc. (NBD TSX). The last was on January 16, 2013 as you cited. At the time the shares were trading for $28.84 and Tom wanted to know if the stock had built a big enough base to make the case for a buy. The research conducted on Tom’s behalf indicated that the shares had broken the uptrend line and looked to be taking a breather. It was advised to be patient to see if NBD could shake off the sellers and begin a new advance. In hindsight that was the right call. NBD moved sideways building a base until late February when it made a quick two week run to its 52-week high of $37.93 on March 15, 2013. But that was the end of the line in terms of sustained forward momentum.
An examination of the charts will add to your understanding of the technical indicators in play with NBD.
The three-year chart illustrates a stock that has been trading in a gentle down channel since it hit the 52-week high in March of 2013. There is also a double top that has surfaces as the second lower high formed in June. A double top is a pattern that points to the end of an uptrend. In addition NBD has breached the 50 and 200-day moving averages. All of these indicators are calling for increased investor attention and caution.
In the January analysis it was identified that the stock had made an aggressive run from the late 2011 bottom but had not built much support along the way. With the break below support at $30.00 and the test of support at $27.00 in August of 2013 it would appear that there is a long way to fall if $27.00 is breached.
The six-month chart offers a number of additional signals worth mentioning. The MACD and the RSI both provided strong signs that the top was in by mid March and as we came into early August the momentum indicators once again generated a sell signal. Finally there is a death cross forming that should not be ignored.
NBD is not providing sufficent evidence to suggest that the selling pressure has abated and would advise you seriously review your position.
Make it a profitable day and happy capitalism!