Domtar (Friday’s close US$46.85) traded below a falling trend-line for about three years from 2014 to 2016 (dashed line). The stock rallied above the falling trend-line in late 2016 to signal a trend reversal (A), but subsequently pulled back to the falling trend-line, where it found support (B). The ensuing rise to US$52.58 in February (C) signalled renewed investor interest and the start of a new up-leg.
After a much needed correction toward US$41-US42 (D), Domtar reversed and the recent price action suggests the stock is ready to resume the up-trend. A sustained rise above US$47-US$48 would confirm it. Only a decline below US$41-US$42 would be negative.
Monica Rizk is the senior technical analyst and Ron Meisels is the president of Phases & Cycles Inc. (phases-cycles.com). And he tweets at @Ronsbriefs. They may hold shares in companies profiled.
Chart source: www.decisionplus.com
Monica Rizk
Ron Meisels