Magna International Inc. generating trading opportunities

Jul 6th, 2015 – 1 Comment

There is nothing in the charts that indicate we can expect a trend reversal but that is not a buy and hold recommendation.


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Automotive.


Hello Lou,

Could I get your analysis on Magna International.

Please and thanks.

Mario

 

Hey Mario,

Thanks for the assignment. Magna International Inc. (MG TSX) is a world leader in auto parts manufacturing. In serving their customers the company is driven by four principals. The organization strives to be smarter, provide cleaner solutions, design safer components, and deliver components that are lighter.

In some respects MG could be viewed as a high tech company as they take a disciplined approach to product development, process improvement, and material development. Just some of the innovations and initiatives that caught my eye included the thin front seat which adds leg room for passengers in the rear seat, use of composite materials, and their Aluminum Competence Centre. Its hard to ignore a company that feeds the bottom line by constantly improving the products that they bring to market.

An inspection of the charts will form the basis of my analysis.

 

MG

The three-year chart depicts an advance that started in November of 2012 when the shares broke above resistance at $22.50. The move higher took the shares to $60.00 by September of 2014 where they pulled back aggressively breaching support along the uptrend line and both the 50 and 200-day moving averages.

Of note is the V- bottom pattern that emerged in October as buyers saw value at the lows and started a new advance. The RSI indicated that the shares were oversold and in concert with the MACD signalled a buy.

 

 

 

 

 

 

MG2

The six-month chart illustrates a more volatile trading pattern with a number of retests of support along the moving averages. The MACD and the RSI signalled a buy in January as the shares touched $55.00 and stepped up to just over $68.00 by March. There was a retest of support along the 200-day moving average in late April just below $62.00. By early May the momentum indicators signalled a buy taking MG to a 52-week high of $74.24 by early June.

There is nothing in the charts that indicate we can expect a trend reversal but that is not a buy and hold recommendation. At this time you may want to investigate using a trading strategy to take advantage of the swings in the value of the shares.

Next time I will examine the charts for Bombardier (BBD.B TSX) for Alessandro.

 

Make it a profitable day and happy capitalism!

 

Categories: Automotive
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media