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Is Seaspan Corp. A Stock To Look At?

01/05/07 02:22:46 PM
by Koos van der Merwe

Is this stock one to look at or shy away from?

Security:   SSW
Position:   Hold

Seaspan Corp. (SSW) started trading on August 10, 2005, reaching a high of $21.55 before falling to a low of $17.18 by October 21. From there, the stock price started climbing, reaching a high of $22.41 by April 7, 2006. From this high, the price fell once again to to a low of $19.71 on June 16. This allowed us to draw a Fibonacci extension as shown on Figure 1, with an immediate target of $22.95 (0.618), which was reached on September 1. The high of $22.95 also hit the trendline drawn from the two previous pivot points of August 10 and April 7. From this high — the high of September 1 — the price appeared to consolidate in a broadening formation, forming a low of $21.08 on November 10. Broadening formations are notoriously unpredictable, but with the relative strength index (RSI) pointing upward, the odds were that the price would rise, and it did reach a high of $24.03 by January 5, 2007, breaking above the resistance line in the process. What now for the future? To determine this, we now turn to a daily chart.

FIGURE 1: SEASPAN, WEEKLY. Broadening formations are notoriously unpredictable — what does the future hold for this stock?
Graphic provided by: AdvancedGET.
I have drawn trendlines from July 27 to November 10 on Figure 2, with a parallel from the September 1st high. This does give us a target around about the $24.50 level. With an overbought RSI, this looks feasible.

FIGURE 2: SEASPAN, DAILY. With an overbought RSI, this stock looks feasible.
Graphic provided by: AdvancedGET.
To analyze farther, I then turn to a daily OmniTrader chart (Figure 3). I have programmed my parameters to give me sell signals based on a backtest hit rate over 250 days, and a forward test hit rate over 25 days. The program has been successful and gave me the latest buy signal on Thursday, December 28. I use an 8% stop-loss. As you can see, I would currently be long the stock and remain long until a stop-loss was hit, or the program suggested a short sell.

FIGURE 3: SEASPAN, DAILY. This chart shows buys and shorts. The chart also shows the backtest period used in the analysis.
Trade well in this uncertain market.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
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