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Manulife Financial Corp. headquarters is seen in Toronto Monday Dec. 9, 2002. (KEVIN FRAYER/CP)
Manulife Financial Corp. headquarters is seen in Toronto Monday Dec. 9, 2002. (KEVIN FRAYER/CP)

Schizas' Mailbag

Manulife: Not a buy and hold stock Add to ...

Hello Lou,

You’ve probably reviewed this stock before, but I thought I’d ask anyway for you to look this one over. What’s happening with Manulife? Do you see this as a good time to buy/sell/hold based on the technicals/fundamentals?

Regards, Jeff

Hey Jeff,

This will be the third time that I have reviewed the charts for Manulife Financial Corp. but the first two occasions were in 2010 so this is a timely request. When I first analyzed the shares they were trading for $18.02 on April 30, 2010. At the time it didn’t look like a buy and hold stock. It was advised that the best course was to confirm the bottom and avoid anticipating it. From there the stock gave up a lot of ground on investor concerns about the future of the company.

The second analysis was published on Sept. 10, 2010 when the shares were trading for $13.00. The issue at the time was investor reaction to less than stellar performance and perhaps more selling to come. The stock retested $12.00 in mid October after which it began a climb to $19.00. With that as background, another run at the charts will provide a more current assessment of the opportunities and risks associated with MFC.

The three-year-chart indicates that there is still a downtrend in place and that the evaluation of April 30, 2010 stands. MFC is not a buy and hold stock. You have to capture profits when available and avoid just being along for the ride. After the $19.00 high in February of 2011 the shares began an long retreat to the lows of $10.18 on Dec. 19, 2011. From there it caught a bounce but has met resistance at $14.00.

The six-month chart depicts a stock that is trading in an up channel with support along the 50-day moving average. A golden cross is on the verge of forming and the MACD and RSI indicate that an advance is shaping up. If MFC can get through $14.00, it can run to $16.00 without a lot of resistance.

The company is expected to report its first quarter results on or about May 3, so watch the trend that develops as we get closer to that flex point. Trade this one for income.

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

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