Skip to main content

The Globe and Mail

MagneGas volume has thinned out over the last month

Hello Lou,

I listen to you every morning on my way to work on 640AM and have respect for your advice. Can you please let me know your thoughts on MNGA?

I have made a significant call and would love to get your assessment.

Thanks in advance,

Syd

-------------------------

Hey Syd,

Thanks for the assignment and for listening to Talk Radio AM640. This will be the first time that I audit the case for MagneGas Corporation (MNGA NASDAQ). The company has developed two versions of a green gas called MagneGas and MagneGas 2 using a patented process that converts liquid wastes into hydrogen-based fuels.

These two gases are marketed as substitutes for acetylene, and the company claims they cut faster and cleaner. Their second product is a co-combustion technology that adds MagneGas to other materials including coal, medical waste, and heavy oils, resulting in an extremely high flame temperature. The high temperature generates combustion improvements, including a drastic reduction in carbon dioxide.

The company has a market capitalization of $48.22 million and average daily volume of 1,447,480 over the last three months. Volume has thinned out considerably since December 24, 2015 which you should add to your decision making matrix.

An inspection of the charts will add texture to my assessment.

Desktop users click on image to enlarge

The three-year chart exhibits the characteristics of a stock that has been trading in an up channel since January of 2015 where it caught a lift off its 52-week low of $0.52. What is also evident is the tendency to spike high and then pull back and retest the lower rail of support in the channel.

The MACD and the RSI both generated buy signals in late April and late November as the shares moved aggressively higher in a short burst of buying. In late May and then mid-December, the momentum indicators alerted investors that they should prepare for an increase in selling pressure.

Desktop users click on image to enlarge

The six-month chart pulls into focus the buy and sell signals generated by the MACD and the RSI in late November and mid-December. What is also evident is that MNGA is currently testing support along the 200-day moving average.

What the analysis tells me is that if you want to profit from your call you might want to look for opportunities to trade this stock. The lifts have been generous on a percentage basis, while the declines don't just collapse but rather offer ample time to capture profits.

Next time I will probe the charts for National Bank of Canada (NA TSX) for Jane.

Make it a profitable day and happy capitalism!

Story continues below advertisement

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Please note that our commenting partner Civil Comments is closing down. As such we will be implementing a new commenting partner in the coming weeks. As of December 20th, 2017 we will be shutting down commenting on all article pages across our site while we do the maintenance and updates. We understand that commenting is important to our audience and hope to have a technical solution in place January 2018.

Discussion loading… ✨