Hi Lou,
Your analysis of Maple Leaf Foods would be appreciated.
Regards,
George
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Hey George,
Thanks for the assignment. This will be the second time that I examine the charts for Maple Leaf Foods Inc.. The last was on Sept. 2, 2009 when the shares were trading for $8.75. The analysis was conducted in response to a number of emails arising from the listeria crisis that caused a number of deaths. The stock had been in a sell off that started in 2007 and the consequences of the tainted food catastrophe didn't help. It was advised to look for other opportunities until the company got a handle on the situation and rebuilt faith with consumers.
Over the last six years, MFI has been rationalizing its operations by shutting down inefficient facilities and streamlining its distribution. Those steps have been reflected in the price of the stock.
An inspection of the charts will identify the trend, support, and resistance that are in play at this time.
The three-year chart indicates the progress the company has made re-establishing trust with consumers and whipping their operations into shape. Investors have enjoyed a profitable ride that took off in December of 2012 and reached a 52-week high of $24.07 in April of 2015.
Some of the patterns that are worth mentioning include the multiple tests of support along the uptrend line and the 200-day moving average. When buyers step up on weakness it signals to the informed observer that the move higher has more in it. What is also visible is the resistance that has come in near $24.00.
The six-month chart highlights the leg up that started in late January of 2015 as the shares broke above resistance at $19.50 and ran to $23.00 by early March. The catalyst for the move was the release of Q4 results and the increase in the dividend. The relative strength index (RSI) and the moving average convergence divergence (MACD) both signalled a buy as the shares moved through resistance.
At this juncture, it appears that the shares are building a base as we await the release of Q2 in late July. From the evidence at hand, MFI looks positioned to move higher.
Next time, I will analyze the charts for H2O Innovation Inc. (HEO TSXV) for David.
Make it a profitable day and happy capitalism!
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