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by Koos van der Merwe
The maxim is "Sell in May and go away." Here is one stock that is suggesting the opposite.
Position: Accumulate
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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TRIANGLES
A Buy In May?
05/07/12 09:04:56 AMby Koos van der Merwe
The maxim is "Sell in May and go away." Here is one stock that is suggesting the opposite.
Position: Accumulate
| Royal Bank of Canada (RBC) followed the financial world with the collapse of May 2007, as the mortgage-backed crisis punished financial institutions throughout North America. Figure 1 shows this. |
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| FIGURE 1: ROYAL BANK OF CANADA, MONTHLY |
| Graphic provided by: AdvancedGET. |
| |
| The chart is a monthly chart of Royal Bank of Canada and shows how the price dropped from a high of $61.25 in May 2007 to the low of $25.57 by February 2009. From that level it rose to $63.06 by April 2010. Since then, it traded in a range falling as low as $43.46 by November 2011 before recovering once again. The relative strength index (RSI) is still suggesting a positive trend. |
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| FIGURE 2: ROYAL BANK OF CANADA, DAILY |
| Graphic provided by: AdvancedGET. |
| |
| The daily chart (Figure 2) shows how the price rose from a low of $43.23 on November 25, 2011, to a high of $59.20 by March 2012. From that level it is forming another equilateral triangle, which is suggesting a target of $65.32 when the upper trendline of the triangle is penetrated. The price is still trading with the JM internal band, and a break above the upper trendline will confirm a buy signal. The JM internal band is a 15-period moving average offset by 2% positive and 2% negative. Do note that the XTL trend indicator that colors the price candlestick bars is still black, which is neutral. Blue suggests a buy and red suggests a sell. I would not be a buyer of RBC at the moment, but it is a stock that is now on our watchlist, waiting for a definite buy signal. |
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 | |
| Phone # for sales: | 6042634214 |
| E-mail address: | petroosp@gmail.com |
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