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A pedestrian walks past the TransAlta building in downtown Calgary, Monday, Oct. 5, 2009. (Jeff McIntosh/The Canadian Press)
A pedestrian walks past the TransAlta building in downtown Calgary, Monday, Oct. 5, 2009. (Jeff McIntosh/The Canadian Press)

Schizas' Mailbag

TransAlta caught in a stubborn downtrend Add to ...

Hi Lou,

Any updates on TransAlta?

GT

Hey GT,

This will be the third time I have examined the case for TransAlta Corp. in 2012.

The first occasion was on Jan. 6, 2012, on a request from Jim as the stock was trading for $21.26. I advised to watch that the shares held support at $20.50 and below that at $20.00. Unfortunately by the end of February the stock hit resistance along the 200-day moving average and by early March breached support at $20.00.

More Related to this Story

The second analysis was conducted on March 23, 2012, on an assignment from Al when the shares were trading for $18.95. It was suggested that there could be a trade setting up but the downtrend that had begun in October of 2011 was not to be ignored. It was advised that the shares might have to retest support at $15.00 if it failed to turn higher. Retrospectively that was the right call. There was a short advance after March 23 but the selling pressure continued taking the TA below $15.00.

Another review of the charts will provide greater insight as how best to proceed.

The three-year chart provides continued evidence of the downtrend that refuses to let go of this stock. TransAlta hit a 52-week low of $13.96 on September 11 and then caught a bounce to its current level. The MACD and RSI both signalled a trade off the lows and now appear to be indicating that the tank is running dry.

The six-month chart provides a close-up of downtrend and the buy and sell signals generated by the MACD and RSI. Currently the MACD appears to be about to cross below the signal line. If TransAlta can make its way above $15.75 there could be a trade to $16.50 before it meets resistance but given the downtrend that’s a big if.

Be very cautious when handling this stock.

Make it a profitable day and happy capitalism!

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

 
Security Price Change
TA-T TransAlta Corp. 12.79 0.0000
0.00 %
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