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Charts look bullish for this utility dividend stock Add to ...

Hey Lou,

Would you mind taking a look at Algonquin Power and Utilities and sharing your thoughts?

Thanks,

Zach

Hey Zach,

Thanks for the assignment.

This will be the second time that I run the charts for Algonquin Power and Utilities Corp. The last time was on Aug. 14, 2013, when the shares were trading for $6.78 and offered a dividend yield of 5.015 per cent. Bola thought that the situation at the time looked too good to be true and wanted some input.

The research undertaken eight months ago outlined the story of a stock that had breached its uptrend line, was operating under a death cross, and needed to hold support at lower levels before committing capital. It was advised to put AQN on a watch list for a better entry point that could provide a clear indication of a return to the upside.

Retrospectively that was the right call. The shares hit a 52-week low at $5.96 by October of last year where they caught a bounce and started a new advance. An examination of the charts will shape my opinion of AQN.

The three-year chart provides an illustration of a V bottom which is a reversal pattern. The stock has been moving higher with support along the uptrend line and the 50-day moving average. A golden cross formed in January of 2014 indicating that investors could expect the advance to continue. The MACD and the RSI both generated buy signals in October 2013 at the lows and again in March of 2014.

The six-month chart depicts the base building around $7.60 that began in mid March and the resistance at $7.80. The momentum indicators are not currently signalling a buy but with a dividend yield of 4.45 per cent you will at least collect some rent. At this point in time the stock features an intact uptrend line, a golden cross, and support along the 50-day moving average.

The next quarterly report is scheduled for May make sure to monitor trading as we approach the flex point.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lou@happycapitalism.com.

 

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