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Schizas’ Mailbag

Expect more selling with Rogers Sugar Add to ...

Hi Lou,

I own RSI and wonder why the price has increased, (except for the few days before dividend payment).

Do you have an answer?

Margaret

Hey Margaret,

Thanks for the assignment.

Rogers Sugar Inc. is the largest refined sugar distributor in Canada. They own cane refineries in Montreal and Vancouver, a sugar beet factory in Taber, Alberta and a distribution and blending centre in Toronto.

More Related to this Story

Your enquiry is an interesting one and highlights some of the advantages of honing your skills when using technical analysis. The move up that you were asking about started on Sept. 17, 2012, on a series of technical signals that were ahead of news that broke on Sept. 28, 2012. As all good hunters know if you watch for signs along the trail you can better position yourself for an opportunity.

A review of the charts will provide greater insight as to what was moving the shares higher.

The three-year chart illustrates the buy and sell signals generated by the MACD and the RSI in 2012. Investors who want to reduce risk and generate profits need to gain mastery of these tools and others in the technical analysis job box. Also worth noting is that all along the advance the stock has found support along its moving averages which indicates that investors have been willing to step up and buy when the shares pulled back.

The news that broke on Sept. 28, 2012 was the ruling by the Canadian International Trade Tribunal that reinstated anti-dumping and countervailing duties on refined sugar imports from the European Union. The duties will remain in force until 2015. The MACD and RSI were indicating that a trade was setting up before the fundamental story was revealed.

The six-month chart provides a close-up of the sell signal generated by the momentum indicators in August when the shares hit resistance at $6.40 then pulled back to $6.00. The buy signal generated in September at $6.10 was ahead of the news and set up an advance to $6.60. Currently it appears that the stock is about to test support along the 50-day moving average with the RSI and MACD both indicating that more selling should be expected. The company will report fourth-quarter results on November 21 and it is advised to put that date on your action calendar.

In summary, the stock was moving higher on technical buying from investors who took advantage of the tools they had mastered.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

 
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