Potential for decline into Sept/Oct remains
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Goodman Group (GMG)
Technical Recommendation: Reduce
(Click here for GMG fundamental research and company information)
At this stage GMG continues to trade above the rising 200DMA and the uptrend from the October lows remains intact.
But the stock is now testing the upper limits of the range that has been in place since April 2010 and the weekly stochastic is beginning to weaken from overbought levels.
The fact that resistance is in close proximity does not constitute a Sell signal but we should always exercise a degree of caution as significant resistance levels are approached. And as GMG is nearing resistance in conjunction with a large number of stocks, and as I believe that the overall market could experience some weakness over the next month or so, then I believe that adding to exposure at these levels carries risk.
Downside risk is toward the combined support of the 200DMA and the uptrend from the October 2011 lows ($3.42–$3.35). A break below there would suggest a deeper pullback, creating potential for a test of the lower limits of the range at $2.80.
Lighten exposure and re-assess as support is tested.
(click image to enlarge)