Shares of Laurentian Bank of Canada have experienced a healthy rally, rising from $42.95 on January 18 to over $50 just five months later. Given the recent price strength, the shares recently experienced a "Golden Cross".
A "Golden Cross" occurs when a short-term moving average, in this case the 50-day moving average, crosses above a longer-term moving average, in this case the 200-day moving average. When this occurs, it marks a potentially positive signal suggesting the upward price momentum may have traction. This occurrence indicates a potential buying opportunity to investors.
Many traders suggest waiting until the 50-day moving average crosses over the 200-day moving average by a certain percentage, such as 3 per cent, to confirm the bullish signal.
Laurentian's two previous Golden Cross occurrences resulted in strong stock performance in the months ahead.
The most recent Golden Cross was back in early October of 2015. The 50-day moving average crossed above the 200-day moving average on Oct. 2, when the stock price closed at $49.24, and approximately two months later, the share price rallied to over $55.
Prior to that, the 50-day moving average rose above the 200-day moving average on July 30, 2013. The stock price closed at $45.45 and steadily advanced, closing above $51 approximately one year later.
In recent days, the stock price has lost its recent positive price momentum, edging slightly lower. However, the 4.8-per-cent dividend yield should provide the stock with downside support.
In addition, technically, the shares should find support around $50, close to its 50-day moving average (at $49.90), and failing that near its 200-day moving average at $49.38. There is also support around $48.
The shares face overhead resistance around $52.75, near its recent peak, and after that at $54, then around $55.50.
From a fundamental perspective, analysts see little upside from current levels. The average one-year price target is $52.60, implying approximately 4-per-cent upside, which is based on two buy recommendations, six hold recommendations, and two sell recommendations.
Below is a list of seven other securities with recent Golden Crosses and one stock exhibiting the bearish Death Cross.
The death cross is a potentially bearish signal for a stock that occurs when the shorter-term moving average crosses below the longer-term moving average.
This report is based on technical analysis. Technical analysis does not replace fundamental analysis, but can help identify companies worth having a closer look at.
Golden Cross | 50-day moving avg. | 200-day moving avg. | |
---|---|---|---|
WCP-T | WHITECAP RESOURCES INC. | $9.67 | $9.59 |
TFI-T | TRANSFORCE INC. | $23.68 | $23.30 |
CPX-T | CAPITAL POWER CORP. | $18.51 | $18.26 |
LB-T | LAURENTIAN BANK | $49.90 | $49.38 |
ENF-T | ENBRIDGE INCOME FUND HOLDINGS INC. | $29.90 | $29.78 |
IAG-T | IND ALLIANCE INSURANCE AND FINANCIAL SERVICES INC. | $41.28 | $40.96 |
GRT.UN-T | GRANITE REIT | $38.31 | $38.10 |
Death Crosses | |||
EXE-T | EXTENDICARE INC. | $8.84 | $8.89 |