First National Financial Corporation setting up a trade ahead of Q2 results

Jul 23rd, 2014 – Comment

With the symmetrical triangle in play and a dividend yield of 6.47% FN offers a reasonable opportunity for a profitable trade.


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FN LOGO

Greetings Lou,

I would much appreciate getting your analysis on First National Financial.

Many thanks and regards,

Robert

 

Hey Robert,

Thanks for the assignment! First National Financial Corporation (FN TSX) is Canada’s largest non-bank lender. They focus on originating and underwriting residential and commercial mortgages and have $77 billion in mortgages under administration. The company has developed the Merlin Mortgage Application system to serve the mortgage broker channel.  On July 16, 2014 the company closed a deal to provide a customized version of Merlin to Toronto- Dominion Bank to improve their deal flow through the broker channel. Its always a good thing when a company can earn income from systems developed in-house .

 

A probe of the charts will help identify how best to proceed with the shares of FN.

 

 

FN

The three-year chart provides the outline of a stock that had been oscillating in a gentle up channel that began in October of 2011 and ran until August of 2013.  As the shares broke above the upper resistance line of the channel they then began a more robust uptrend taking the price from $18.00 in late September of 2013 to a high just above $25.00 by February of 2014.

The stock has pulled back starting in April of 2014 but maintained support along the 200-day moving average. Make note of the symmetrical triangle that has formed since April. A symmetrical triangle is a continuation pattern which indicates that the shares have consolidated and that there is buying pressure building to send the stock higher.

 

 

 

 

 

 

FN2

The MACD and the RSI on the six-month chart signalled a buy in late March as the shares of FN were oversold. The momentum generators produced another buy signal in late June as the stock bounced off the 200-day moving average.

 

The next flex point for FN will come on July 29, 2014 when the company reports its Q2 results. With the symmetrical triangle in play and a dividend yield of 6.47% FN offers a reasonable opportunity for a profitable trade.

Make it a profitable day and happy capitalism!

 

 

Categories: Financial Services
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