Trading opportunity with Magellan Financial (MFG)

As a funds management business with a global focus, Magellan Financial has seen its share price ride the wave up with global markets. Having traded under $2 in 2012, the latest bull run saw the share price spike to over $27 at the end of 2015. Weaker markets at the start of the year had an impact on funds under management and this resulted in the share price taking the lift back down to $20. However, now price action starts to get interesting and it looks as though it will try to head higher again.

Having bounced off the long term uptrend line in February near $20, Magellan rallied for three weeks to get over $23. It then corrected sideways for 3 months without going to a new low, and that is a positive sign. When looking at charts, the time it takes to move up compared to a move back down is very important. If a stock can make a $3 move in only 3 weeks but then the market needs a much longer period of time to push it back, then that indicates a lack of selling pressure. In this case, the market has had 3 months to get it down to $20 again but could not push it below $21.

We can now see the stock now having another attempt to push through resistance near $23. Momentum is looking positive and we are likely to be very close to seeing a breakout towards higher levels. If that were to occur, we can see targets of just above $25 being achieved.

MFG 17 May 2016


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Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168).

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