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TECHNICAL ANALYSIS


Rogers Communications A Share To Watch?

01/21/13 10:56:35 AM
by Koos van der Merwe

Looking for a share to buy is always a challenge.

Security:   RCI
Position:   Buy

Rogers Communications (RCI) is a Canadian company that supplies wireless, digital cable TV, high-speed Internet, and home phone services to consumer and businesses in Canada. With the world waiting for Apple to announce a television that will probably not need a cable company but offer TV shows over the Internet, should we invest in cable companies?

FIGURE 1: RCI, WEEKLY
Graphic provided by: AdvancedGET.
 
Figure 1 is a weekly chart of Rogers and shows the parallelogram that formed. The price rose from a low of $19.58 in March 2009 to a high of $40.64 by October 2010. The breakout of the parallelogram is suggesting a target of $61.70 (40.64 - 19.58 = 21.06 + 40.64 = 61.70). What is a concern is the relative strength index (RSI), which is at overbought levels. The chart also shows the JM internal band indicator, with a buy signal when the price rose above the upper band. To help with the decision of whether to buy the share or not, I look at the daily chart for an entry point.

FIGURE 2: RCI, DAILY. Here's a chart showing vote line buy signals.
Graphic provided by: OmniTrader.
 
The daily chart in Figure 2 shows the vote line first gave a buy signal based on the RSI 12-period strategy and Verve trailing stop strategy. Sell signals where triggered whenever the price broke below the Verve trailing stop, but soon after, another buy signal was given based on a different strategy, as shown below the vote line. At the moment, the vote line is positive, with a reinforced buy signal given on the rise in the price on January 17, although the RSI 14-period indicator is positive.

FIGURE 3: RCI, DAILY. Here's a chart showing an RG internal band.
Graphic provided by: AdvancedGET.
 
In Figure 3, I am introducing a new internal band. The RG internal band is a strategy based on a six-period exponential moving average (EMA) of the price of four periods previously, and offset positive and negative by 1%. The newest buy signal was given on November 21, and the price is still in buy mode. The moving average convergence/divergence (MACD) is close to giving a buy signal.

I would be a buyer of RCI at the moment, but I would sell should the price break below the Verve trailing stop or the lower band of the RG internal band strategy.




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
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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