A Jean Coutu pharmacy in downtown MontrealSHAUN BEST/Reuters
In our previous report (March 28, 2009, $7.75), we suggested that Jean Coutu could rally toward $10-$11 but that the upside was limited due to the long-term falling trendline (solid line). Soon afterward, the stock rallied to $10.94 (A), and then, as expected, encountered resistance at the long-term descending trendline. Subsequently, the stock settled into a pattern of lower highs and lower lows (dotted lines) and then into a pattern of higher highs and higher lows, to signal a reversal (rising dashed lines). This action ended the falling trend and signalled the beginning of a new up-trend.
Point & Figure measurements provide a target of $14. Only a decline below the 40-week moving average (about $10) would be negative.
Ron Meisels is a contributor to the www.NA-marketletter.com website. Monica Rizk is the senior Technical Analyst for Phases & Cycles Inc. They may hold shares in companies profiled. Please see the site for a glossary.
Chart source: www.decisionplus.com
Ron Meisels
Monica Rizk