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Schizas' Mailbag

TD Bank in the midst of a pullback Add to ...

Hi Lou,

Love your shows on Talk Radio AM 640. Please give me your views on TD. Is it a good buy at today’s price?


Hey Massimo,

Glad to hear that you are enjoying the time you spend with Talk Radio AM640. TD Bank Financial Group is a solid dividend payer with a yield of 3.67 per cent. When it comes to Canadian banks I think you should consider accumulating their shares on a regular and consistent basis and taking advantage of their dividend reinvestment plans. The banks in Canada operate as an oligopoly and that gives them tremendous market power. TD has a strong domestic franchise and has made some strategic acquisitions in the United States.

A closer look at the charts will provide needed insight to help with your decision.

The three-year chart depicts the resistance the shares have struggled with in the $85.00 range, first in 2011 and then again in 2012. The stock has provided lots of opportunities to trade for profit over the last two years. However, as mentioned, you could also approach this as a regular and consistent long-term accumulation with dividend reinvestment that would provide a solid basis for your portfolio.

The shares caught a bounce off $77.00 and are holding support along the 200-day moving average. The question we want to answer is if this is a good entry point? The six-month chart will provide greater evidence to help with the decision.

The six-month chart provides a close-up of the patterns observed on the three-year chart. The resistance in the $85.00 range, the bounce off $77.00, and the support along the 200-day moving average are all brought into sharper focus. The MACD and the RSI both signalled a sell in late March and the buy in early June. In mid-July the momentum indicators both signalled a pull back as the shares hit resistance at $81.00.

At the moment it seems like the shares are going to continue to pullback so there could be an opportunity to get in at better prices. Worth mentioning is the support that comes in at $75.00, $72.50, and $67.50. TD will report their-quarter results in late August which is the next flex point on the calendar.

Finally, think seriously about an accumulation strategy.

Make it a profitable day and happy capitalism!

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

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