Technical Analysis - MCP - McPherson's Limited

McPherson (MCP) is a company involved in marketing of household consumer products, and book and commercial printing. This will be all that is going to be said in terms of fundamentals of this company. The following will be strictly a technical analysis using methods from McNeil's book How to make money in Stocks and Weinstein's book Secret for Profiting in Bull and Bear Markets.

The two graphs presented here are the 2 year daily graph and the 5 year weekly graph. The black line is the closing price. The red lines are the 20 point moving averages. The Green line is the Stopping criteria from VectorVest.

Looking at the 2 year daily graph, the current price is almost back up the top level from around 1 year ago. This is potentially a set of the cup and handle pattern mentioned by McNeil
(http://ozstock.blogspot.com/2010/12/canslim-method-william-oneil.html). Once this signal breaks strongly, it will be a good signal to buy. Also the buy should only happen when the price still keep above the moving average.

From Weinstein's method
(http://ozstock.blogspot.com/2011/01/stan-weinsteins-secrets-for-profiting.html), the top from almost 1 year ago seem that it may be the end of Stage 2 and going on Stage 3 as the increase in price levels out. However a Stage 4 which is going downwards phase, did not develop, but instead it went sideways for almost 1 year and now it may be ready for a cup and handle.

Looking now at the 5 year weekly graph, we see that the current high price and the top of 1 year ago is only slightly lower that the pre-GFC top. One interesting feature from this 5 year graph is that the crash of MCP due to the GFC can be anticipated. The red moving average line is a good indicator since the pre-GFC peak, MCP then drifter slowly below the red line and even form lower top a few times below the red line. This is the point to sell. Only after this, then MCP dropped dramatically. So those who watched the red moving average should have got out before the steep crash.

Technical Analysis - Dow Up but All Ords Crawling

There has been a lot of talk of a two speed economy in Australia but perhaps there is a bigger two speed economy when we look at the world as a whole. The developed world which has slumped during the GFC is showing signs of recovery, slowly but surely. The high-flying GFC defying developing economies led by China and dragging a resource economy like Australia (it's more relevant here to classify Australia as a resource economy than a developed economy for our current argument), are showing signs of braking due to overheating. Let's look at our usual comparison of Gann angle charts for Dow and All Ords to compare.

Looking at the Dow first, today's news announced the Dow has doubled its GFC low, meaning it's now over 12000 while the GFC low was 6000. This has much less importance though than the half way point between the Peak and Trough of the GFC. Roughly, the Peak-Trough is 14000-6600 = 7400. Half of this is 3700, but clearly, the DOW is way above 6600 + 3700 = 10,300. So the half way point is clearly broken and not relevant now.

What is interesting from the Gann angles is that the current rise in the Dow sits very nicely at the Gann +10 line and has been doing so since mid 2010. The mid 2010 point, from our previous analysis, was where it looked like it was a double top. Since then the Dow has powered ahead. There are no visible signs of breaking any angles.

Going on to the All Ords, our previous review stated that a triple top has been confirmed. This was the right call but since then it has reversed quickly. The result for the All Ords is however a bit lack lustre. Since the reversion from the triple top, the All Ords has climbed but only very slowly. At the moment it is at the level similar to the peak of the triple tops between Oct 2009 and mid 2010. In fact the current All Ords is hugging the top of the Bollinger Band and there is no evidence of violating any Gann angles soon.

So what do we make of all this? Though the All Ords is moving very slowly, both All Ords and Dow are still on a very firm positive trend. Unless there is any reason to doubt, we can play the market with the continuing trend but keep your fingers on the button since it can turn absolutely at any moment.