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Time to sell National Bank, technicals suggest

The charts have turned ugly for National Bank of Canada , according to technical analysts at Phases & Cycles, who suggest now may be an ideal time for active investors to offload the stock.

After rallying to a 52-week high of $81.98 in May, the stock stayed in a trading range between $76 and $81 for nearly four months. But there have been numerous negative technical events over the past few weeks, said analysts Ron Meisels and Monica Rizk, including the stock declining below that trading range and falling below the 40-week moving average (shown in the chart below as B).

Other bearish developments include:

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-The stock declining below the long-term rising trendline (dashed line);

-The Moving Average Convergence/Divergence (MACD) technical indicator turning negative (lower panel);

-and the stock failing to rise above the broken trendline during the recent rally (C).

"All of the above suggests that current price levels should provide a good exit price for current owners and a good "entry" point for short sellers. Only a sustained rise above $77-78 would reverse the negative status of this stock," the analysts wrote in a note.

National Bank reported third-quarter results Thursday morning that largely met Street expectations, with earnings power remaining solid despite a weaker trading environment. But its stock has dropped about $3 since the earnings release.

Downside: Point and figure measurements, which filter out non-significant price movements, provide targets of $65 and $60, according to the analysts.



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Upgrades are hard to come by for Research In Motion Ltd. these days, but the BlackBerry maker received one today from analyst Shaw Wu of Birmingham, Ala.-based investment banking firm Sterne Agee.

He raised his rating to "buy" from "hold," according to Forbes.com, citing his expectations that some new products will spur sales growth.

"While we continue to be concerned with the company's longer-term fundamentals including risk of further margin compression and competitive risk, we see the company benefiting from near-term product catalysts," Forbes quoted him as saying in a research note. "In addition, we believe its depressed valuation and estimates largely reflect these concerns."

He contends the company is moving into the strongest product cycle it has seen in some time thanks to its new BlackBerry 7 OS, which has received "mixed to positive" early reviews.

Upside: Mr. Wu raised his price target by $7 (U.S.) to $35.

Related: RIM at risk of 'Nokia-like demise,' warns analyst

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Related: RIM delves into music sharing with launch of BBM Music

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5N Plus Inc. reported fiscal fourth-quarter results that "blew through consensus" thanks to record sales and earnings, noted Versant Partners analyst Massimo Fiore. Management feels very confident that the quarterly results are sustainable.

Upside: Mr. Fiore raised his price target by 50 cents to $12.50 a share and maintained a "buy" rating.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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