Genworth MI Canada Inc. testing support along the 200-day moving average

Jun 15th, 2015 – Comment

Finally I am not seeing any patterns that would suggest that the stock is ready to start another up leg.


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MIC LOGO

Hello Lou,

Hope you can shed some light on Genworth. A couple of elements dominate the mortgage landscape- low rates vs a weak economy- arguably the latter begets the former. CMHC has stated they want 50% of the going forward market share- leaving outfits like Genworth et al scrambling for the remainder. Here’s the crux of the biscuit- MIC is 90% backed by a gov’t guarantee- leaving investors capital at risk a paltry 10% I’ve held this stock for 3 years, pays a dividend and has long term growth. What sayest yee oh wise sage.

Frances

 

Hey Frances,

Thanks for the assignment. I appreciate  your kind words but please keep in mind that I don’t get every call right so please use my work as part of your evaluation not your only evaluation! Given that  you have held MIC for the last three years you should become my oracle!

This will be the third time since 2012 that I have examined the charts for Genworth MI Canada (MIC TSX). The last analysis was conducted on February 20, 2015 on a request from Mario. The shares were trading for $30.16, offered a dividend yield of 5.2%, and Mario wanted to know if the bottom was in. The research indicated that the shares had been on a sell off since November of 2014 when they retreated from the 52-week high of $41.98. In addition it was noted that a death cross had formed in January of 2015 which typically signals that added selling pressure could be expected.

It was also observed that there didn’t appear to be any support until $27.50. It was advised to wait for a bottom and maintain surveillance as the stock approached the release of first quarter results in April.  Retrospectively that was the right call as MIC touched a 52-week low of $27.73 by the end of March.

A new inspection of the charts will inform my opinion.

 

MIC

The three- year chart indicates that the stock caught a bounce off the low as the company announced an increase in the rates they would charge borrowers who had less than 10% for a downpayment on their home purchase. By the end of April management announced a share buy back which helped the stock gap higher. The shares have pulled back from resistance near $36.00 and are now testing support along the 200-day moving average.

 

 

 

 

 

MIC2

The six-month chart provides a focus on the test of support along the 200-day moving average and the gentle downtrend that has to be respected. Finally I am not seeing any patterns that would suggest that the stock is ready to start another up leg.

You mentioned CMHC’s policy decision to reduce its market share so the question arises as to how much more share MIC can acquire?

Next time I will examine TD Bank (TD TSX) and Potash Corporation of Saskatchewan (POT TSX) for Dimitrios.

Make it a profitable day and happy capitalism!

 

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