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Some long-term Buying opportunities

Lesley Beath  |  07 Dec 2010Text size  Decrease  Increase  |  

Page 4 of 8

Macquarie Group Limited (MQG)

Technical Recommendation: Buy

Stop/Loss: $33.00

(Click here for MQG fundamental research and company information)


Technical View

The recovery from the 2009 lows peaked in September 2009. MQG then declined by 44% into October 2010.

Despite new 2010 lows being registered in October, I view the period since July as base building and the break above the April downtrend completes the first major hurdle for the stock.

And although price has not gathered upside momentum since breaking that trendline, I believe that risk is to the upside.

Note the daily stochastic (left) which has broken above the 'signal line' confirming the break of the price downtrend: it is now testing that support level and the potential for a quick move to the upside is increasing. This could see price test $37.60; once that is overcome the stock has potential to $40.70 - $42.50. That would complete the reversal process, setting the scene for the next upleg.

The monthly chart (right) highlights the bounce from long-term support and the new Buy signal that was generated in October.

As with QBE, it is highly likely that a low of long-term significance has been registered.

Buy

The stop-loss level is $33.00.

 

MQG chart

(click image to enlarge)