|In an earlier article ("MSO At A Low?" March 24, Traders.com Advantage), I suggested that the stock price had been oversold and was due for a correction. Since then, the stock price has fallen even further, by a couple of dollars, but Figure 1 suggests that Martha is on the comeback trail, especially with a radio show aimed specifically at women--Howard Stern, beware. |
Let us look at what the chart says.
|Figure 1 is a candlestick chart with the indicator -- a stochastic + relative strength index (RSI), but with a difference. The trigger for the indicator is the previous day's indicator (red line). Here is the formula for the indicator in MetaStock:|
I have also drawn the dominant support line, and Fibonacci levels from the low to the high.
Note the following:
a. The price has fallen to test--penetrate and retrace the long-term support line.
b. The price fell to and tested the 61.8% Fibonacci level. Retracement targets are the 50% level at $22.51 and the 38.2% at $27.97.
c. I have shown buy and sell indicators suggested by the stochastic-RSI. Note two things:
1. Short-term traders would have traded as the red line crossed the green line.
2. Longer-term traders could have waited for the indicator to cross the 50-level mark before following the suggested signal.
|Figure 1: Martha Stewart Omnimedia and indicators|
|Graphic provided by: MetaStock.|
|The risk is the overall market and the state of the US economy. Should the Dow Jones Industrial Average continue falling and move into a major bear market, no matter how good the company, the trend will be down as investors run to safe haven. |
Is Martha Stewart Living Omnimedia (MSO) a buy at this price? I believe so, simply on her personality and following alone -- as long as the general market trend is positive. The chart is there simply to tell you when to buy.
|Address:||3256 West 24th Ave|
|Phone # for sales:||6042634214|
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