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STRATEGIES


A Look At Easyhome Ltd.

07/11/14 04:55:39 PM
by Koos van der Merwe

When a stock continues to rise, it means a correction must be on the cards. But that's not to say that a short-term trade is not possible.

Security:   EH-T
Position:   Buy

Looking for a stock to invest in and hold for the long term is always a challenge. A good start is to look at stock prices that have risen strongly and are now due for a correction. Easyhome Ltd. (EH-T) is one of those shares. The company is Canada's largest merchandise leasing company and the third largest in North America. The company also offers a variety of financial services.

Figure 1. Monthly chart with Elliott wave count.
Graphic provided by: AdvancedGET.
 
The chart in Figure 1 is a monthly chart with an Elliott wave count suggesting that a WAVE 3 could be topping out. The wave count is suggesting a target of $17.39 or $15.11. The Probability Index (PTI) is 99, which is very strong. With the relative strength index (RSI) at overbought levels, the correction looks imminent. The wave count offered by the Advanced GET program is suggesting that once WAVE 4 is complete, the target for WAVE 5 is $26.76.

Figure 2. Weekly Chart with Elliott wave count.
Graphic provided by: AdvancedGET.
 
The weekly chart shown in Figure 2 has an Elliott wave count identical to the wave count on the monthly chart in Figure 1, with the exception of the last wave count, which is suggesting that the share is in a wave iv of Wave 3 with Wave 4 to the target of $17.39 still to come once wave v of Wave 3 is complete. The RSI is suggesting a divergence sell signal, which is when the RSI indicator is at overbought levels and is moving lower while the price of the stock is making new highs.

Note the JM Internal Band indicator gave a buy signal on June 21, 2014. The JM Internal band indicator is a 15-period simple moving average (SMA) offset by 2% positive and 2% negative. A move above the upper band suggests a buy and below the lower band a sell. Volume appears to be average.

Figure 3. Daily Omnitrader chart indicating a buy.
Graphic provided by: Omnitrader.
 
The chart in Figure 3 is a daily Omnitrader chart that suggests a new buy signal on the Vote line. The Advisor rating is very strong at 82, based on the Red Green Strategy Long stop. It is suggesting that a buy at a price of $20.30 is a good bet. Note the RSI — although it has not fallen below the 32 horizontal level it is suggesting a buy is turning up. The indTDIJak indicator however is still suggesting weakness.

I would be a buyer of Easyhome, listed on the Toronto stock exchange, but as a trade and not as a long-term investment. Here I would wait for the 4th wave correction to complete as suggested by the weekly chart in Figure 2 before I buy the share for a long-term hold.



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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