Hope all is well and the markets are treating you well. I recently purchased Dragon Wave and was wondering what your thoughts were? I don’t see much more downside at these levels.
All is going well and I hope the same goes for you as well! Thanks for the assignment. This will be the third time since 2010 that I probe the charts for DragonWave Inc. (DWI TSX). The last time was on January 22, 2014 when the shares were trading for $2.09. Ken had been following the company for some time and wanted to know if I thought there was upside potential.
The research provided an evaluative framework that included an aggressive decline, plus resistance along the downtrend line, and the moving averages. What was also evident was that the MACD and the RSI were generating buy and sell signals throughout the retreat. It was advised to be patient and wait for the stock to move through $2.20 with conviction before stepping up.
Retrospectively that was the right call. DWI hit $1.25 by late May of 2014 where a short lived buying opportunity emerged. Another inspection of the charts will help identify if the stock will reward your purchase.
The three-year chart depicts a stock that enjoyed a spike high in July of 2014 which was short lived and gave rise to a continuation of the downtrend that has been in place of years. As DWI came off the highs a number of patterns surfaced. The MACD and the RSI signalled a sell and a bearish crossover formed in late September 2014. The shares had been building a base at $1.00 but that broke down in March of 2015 leading to a 52-week low of $0.65.
The six-month chart outlines the resistance along the 50-day moving average and the sell signal generated by the MACD and the RSI in early March just prior to the breach of support at $1.00. The momentum indicators signalled a buy in early April as the shares moved off of $0.70 to their current level.
The case for DWI has a lot of hair on it. The best way to manage this stock is to monitor it closely for buy and sell signals and trade it for profit along the decline.
Next time I will feature an analysis of Clearwater Seafoods Inc. (CLR TSX) for Harold.
Make it a profitable day and happy capitalism!