Martinrea International Inc. trading in a range

Nov 23rd, 2015 – Comment

Not making a case for a buy at this time


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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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MRE LOGO

Hi Lou,

MRE is small compared to Linamar and Magna, but I like its 5 years chart.

Your thoughts are greatly appreciated.

Many thanks.

Vince

 

 

 

Hey Vince,

 

Thanks for the assignment. This will be the first time that I examine the charts for Martinrea International Inc. (MRE TSX). The company produces metal parts, assemblies and modules, and fluid management systems for the automotive and other industrial sectors. MRE operates in Canada, the United States, Mexico, and Europe.

A survey of the charts will inform my thoughts on this stock.

 

 

MRE

The three-year chart indicates that investors need to view MRE as a trading stock as opposed to a buy and hold security. There have been some very profitable moves higher over the last three years but those were invariably followed by selling pressure that erased much of the  hard earned gains.

In 2015 we saw the same trading pattern as the shares moved from a 52-week low of $8.95 in January to a 52-week high of $14.44 in June. The stock began to pullback from the June high as the MACD and the RSI generated sell signals.  Other warning signs included the break below the 50-day moving average in July and then the 200-day moving average in August. The death cross in late September added to the bearish picture.

Since October MRE has been trading in a tight range with support near $10.50 and resistance close to $11.50.

 

MRE2

The six-month chart highlights resistance along the 200-day moving average that will have to be overcome if a new leg up is to be sustained.  The momentum indicators are neutral at best and not providing sufficient evidence as to whether buyers or sellers are in control of the market.

I would recommend that you keep your powder dry and monitor how MRE trades to see if it can move through resistance with conviction.

Next time I will study the charts for Power Corporation of Canada (POW TSX) and Wal-Mart Stores Inc. (WMT TSX) for Ken.

 

Make it a profitable day and happy capitalism!

 

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