Gregory W. Harmon, CMT, CFA, and Founder and President of Dragonfly Capital Management, provides expert technical analysis of securities and markets. He has over 25 years of trading experience at BNP Paribas, State Street and JP Morgan.
The auto sector has been heating up with sales run rates approaching 17 million units or more from the big guys. While Ford, $F and GM, $GM, have their issues many traders are looking to suppliers are the way to play the space. One that grabs very little attention is heating up like hot rocks, lava, magma. Magna International, $MGA, is awakening from a dormant state and about to erupt on multiple time frames. Take a look.
The daily chart above shows that the stock has been moving a long a channel between 43 and 47 since September began. It becomes interesting as the Relative Strength Index (RSI) is heating up, making new higher highs with a positive Moving Average Convergence Divergence indicator (MACD) as it heads into the top of the channel. These support continued upside price movement. A break above the channel carries a Measured Move higher to 53. On the weekly picture a nearly
2 year Inverse Head and Shoulders pattern is triggering. The price objective of the pattern is a move to at least 68.40. The RSI and MACD on this timeframe also support further upside price action. And it just gets better when zoomed out to the monthly picture below. The symmetrical triangle breakout that is occurring now carries a target on the pattern to 77. And this timeframe also has support from a bullish RSI and a MACD about to cross to positive.
So to recap the targets are 53, 68.40 and 77. For a $47 stock that nobody is watching that is quite a move.