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CUP WITH HANDLE


A Possible Buy

03/26/13 10:01:08 AM
by Koos van der Merwe

With the release of the Blackberry in the US on March 22, 2013 many investors are looking at other Canadian technology companies. Aastra Technologies (AAH-T) is a company worth looking at.

Security:   AAH-T
Position:   Accumulate

Since the recovery in the stock market looks like it is definite, investors or traders are always looking for stocks to buy on a correction. One of the stocks that caught my attention is AAH-T. This is a share that in April 2010 reached a high of $37.08, and then dropped to a low of $13.05 by October 2011. Since then the share has slowly moved up to its current price of $20.00, but with two patterns on a weekly chart that captures your attention.

Figure 1. Weekly Chart of Aastra Technologies
Graphic provided by: AdvancedGET.
 
On the weekly chart of AAH-T in Figure 1, you can see that share prices bounced off their support line. The chart also shows what looks like a reverse head and shoulder formation with the price breaking above the neckline. This suggests that the price could rise to $34.09. (23.57 - 13.05 = 10.52 + 23.57 = 34.09). The RSI is at overbought levels, suggesting a sell. The weekly chart therefore suggests that you should therefore wait for the correction to occur before buying.

Figure 2. Daily Chart of Aastra Technologies
Graphic provided by: AdvancedGET.
 
The daily chart in Figure 2 shows that the share price formed a cup and handle pattern followed by two flag patterns. The cup and handle pattern suggests a target of $21.88 ( 18.64-15.40=3.24+18.64=21.88) and the flag pattern suggests a target of $23.10 (20.15-17.20=2.95+20.15=23.10).

The chart also shows the JM Internal Band, which is a 15- period simple moving average (SMA) offset by 2% positive and 2% negative. A buy signal is triggered when the close breaks above the upper band, and a sell signal is triggered when the close breaks below the lower band. Do note that on February 11, 2013 the closing price did not break below the lower band, so a sell was not triggered.

The RSI Indicator is in sell mode, as is the MACD indicator. I would therefore not be a buyer of the share at the moment. I would however buy half of what I intended to buy should the price move above $19.76, the upper trendline of the flag pattern, and the other half when the closing price breaks above the upper JM Internal band line.




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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