Is Hewlett Packard A Buy?

04/04/12 09:05:30 AM

by Koos van der Merwe

We all know that Hewlett Packard has changed management, and that the company is consolidating itself. Is it worth a buy?

Security: HPQ
Position: Buy

Hewlett Packard (HPQ) is a company that grew so large it became bogged down in itself. On Wednesday, March 21, the company announced that it would combine its printer and PC divisions to save money, part of the technology company's effort to turn around its business.

FIGURE 1: HPQ, DAILY

Graphic provided by: OmniTrader.

Figure 1 is an OmniTrader chart that gave me a buy signal on March 23. This was given by the summation of the two strategies, the relative strength index (RSI) (12 period) and the Verve trailing stop. The chart shows the buy signal, confirmed on the 10-period RSI, and the ergodic oscillator indicator. To confirm the buy signal, I have looked at more indicators in Figure 2.

FIGURE 2: HPQ, DAILY

Graphic provided by: AdvancedGET.

Figure 2, an Advanced GET chart, shows the following:

a. The JM internal band. A buy signal has not been given because the price has not moved above the upper band.

b. The price is trading below the support line, drawn parallel to the upper resistance line, another negative.

c. The XTL Indicator has moved from red to black, not confirming a buy, which only occurs when the candlestick colors blue. The expert trend locator (XTL) is an indicator developed by Tom Joseph that uses a statistical evaluation of the market that can tell the difference between random market swings (noise) and directed market swings (trends).

d. Finally, the only positive is the RSI, a 14-period that has given a buy signal.

With so many negatives and a neutral in the Advanced GET chart, should we rather not stay out of buying a share in the company? The answer is yes.

However, placing my trust in the OmniTrader chart, and the changes occurring within the company, we can take the risk and nibble at the stock. Hopefully, it may turn out to be another Apple where a change in management changed the company. HPQ CEO Meg Whitman: Show your worth and become another Steve Jobs.

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.

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Is Hewlett Packard A Buy?

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