Bank of Nova Scotia struggling with a downtrend

Sep 23rd, 2015 – Comment

Been selling off since August of 2014


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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.


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BNS LOGO

Hi Lou,

I am retired and am looking to supplement my retirement income.

What do you think of an investment in 1000 shares of the Canadian Imperial Bank of Commerce: at about $95,000.
It would generate  a yearly dividend of about $4,000.

I am also looking at the Bank of Nova Scotia: about $60,000 and a yield of about $2,800/year.

Either would be my only stock holding. Not much diversification here but I am interested in the dividend income..

Any comment from you would be welcomed.

Best regards,
Victor

 

Hey Victor,

 

Thanks for the assignment. On September 11, 2015 I published an analysis of Canadian Imperial Bank of Commerce (CM TSX) so I will focus on a study of Bank of Nova Scotia (BNS TSX). This will be the second time that I inspect the charts for BNS. The last was on September 3, 2010 when the shares were trading for $52.21 and the dividend yield was 3.8%

Amir wanted my opinion on the major Canadian Banks and the research conducted  on his behalf indicated that BNS was trading in a range with support at $47.50 and resistance at $52.50. The stock had oscillated through the range three times since May of 2010 and was testing support along the 200-day moving average. By the end of September 2010 the shares broke through $52.50 and ran to $60.99 by February of 2011.

An updated analysis will act as the basis of my thoughts.

 

BNS

The three-year chart indicates that the stock enjoyed a great ride from late 2012 as it ran to a high near $74.00 by early August of 2014. Unfortunately that was as good as it got. Some of the patterns that caught my attention include the double top that surfaced in August of last year. A double top signals that investors should expect a trend reversal.

BNS broke below the 50-day moving average in September of 2014, and a death cross formed in December. The redundant theme for 2015 has been resistance along the 200-day moving average and the breach of support along $61.00 in August.

 

 

 

 

 

 

BNS2

The six-month chart highlights the resistance along the downtrend line and the base building near $58.00. The dividend yield on BNS is 4.87% so if you are looking for income this will meet some of your needs. CM is currently offering a dividend yield of 4.76% so from that perspective its a saw off. From a technical perspective CM is offering a better profile.

 

 

 

 

 

Next time I will re-examine the charts for Teck Resources Ltd. (TCK.B) for Andrzej.

Make it a profitable day and happy capitalism!

 

 

 

 

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