Manulife Financial As A Ray Of Light In The Darkness?

04/03/08 09:13:32 AM

by Koos van der Merwe

How good is Manulife Financial?

Security: MFC-T
Position: Accumulate

Manulife Financial is a Canadian-based financial services company operating worldwide, offering a diverse range of financial protection products and wealth management services. "Despite weak equity markets and unfavorable interest rate movements, we benefited from having a diversified investment portfolio, leaving overall investment experience favorable for the quarter," noted Peter Rubenovitch, senior executive vice president and chief financial officer of Manulife. "Strong sales and good expense management also contributed to the quarter's growth in earnings and ROE."

So is it time to invest in Manulife Financial? Figure 1 shows how the stock price has risen strongly over the years. The three indicators I have chosen are FishMACD of the highs, a rapid RSI modified and a SVAPO.

FIGURE 1: MANULIFE FINANCIAL, WEEKLY. Note how the stock price has risen in recent years.

Graphic provided by: MetaStock.

Figure 1 shows that the indicators have been very successful with buy signals, but not so good on sell signals. For the sell signals, I have therefore incorporated a seven-period trailing stop. This has worked well, taking one out at the correct time, with the oscillators putting one back.

The chart showed a buy signal for the week of January 18, 2008, as the credit crises was developing in the US, with shudders felt in Canada. To fine-tune a buy date more carefully, we would then look at a daily chart.

FIGURE 2: MANULIFE FINANCIAL, DAILY. The stock is looking strong in a market not conducive to financials.

Graphic provided by: MetaStock.

Figure 2 shows how a buy signal was given on January 21, 2008, with a double bottom and a second buy signal on March 17. I have also shown the sell signal given by the seven-period trailing stop. As you can see, Manulife Financial is looking very strong in a market that is not very conducive to financials. It has risen strongly and I would wait for a correction before purchasing.

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.