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HEAD & SHOULDERS


Macdonald Dettwiler A Hold For The Long Term?

07/06/10 10:08:09 AM
by Koos van der Merwe

The market is falling and the bears are running rampant, so it is time to look for stocks you would like to own and hold for the long term.

Security:   MDA-T
Position:   Buy

Macdonald Dettwiler & Associates (MDA) was incorporated in 1969 by two British Columbia entrepreneurs, John MacDonald and Werner Dettwiler, with the objective of providing innovative electronic solutions for complex customer requirements. Over the past four decades MDA has created a highly skilled organization that provides advanced information solutions that capture and process vast amounts of data, produce essential information, and improve the decision-making and operational performance of business and government organizations worldwide.


FIGURE 1: MDA, DAILY. Here's an inverted head & shoulders pattern developing.
Graphic provided by: AdvancedGET.
 
Figure 1 is a daily chart showing that an inverted head & shoulders pattern is developing, suggesting a target of $52.22. Of course, the price should break above the neckline, which at the moment is projecting a resistance at $47.15. The chart is showing how the price has been moving sideways from May 17, where the indexes have been falling badly.

The relative strength index (RSI)(14) is still bearish, and volume is below average, suggesting negativity. This gives an opportunity for a long-term holder to buy the stock at a price that may not be seen again.


FIGURE 2: MDA, WEEKLY. Here's a probable triple-top formation.
Graphic provided by: AdvancedGET.
 
However, Figure 2, a weekly chart, shows that the stock price provided strong resistance at $52.03. Therefore, the chances of the price reaching its target as suggested in Figure 1 looks slim, because at the $52 level, a triple top is forming. Triple tops are notorious for providing a strong resistance level. With the present price at $43.59, and a target of $52.03 to $52.22, it offers the investor about a 19% return.

Based on all this, Macdonald Dettwiler is worth considering.




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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