The index seems unable to move further upward since the highest recorded level at 5146. Since then, the index has been sluggishly moving in small increments at a time compared to previous weeks. We may be seeing a slowing down of the index and for the coming weeks, with the index moving sideways to downwards.
The MACD is now opening wide downwards, which is a bearish indicator. MACD seems to be pointing to the possibility that the index’s sluggishness and inability to move higher may be the starting point of the downward movement of the index. The MACD on the weekly chart seems to support this idea as the MACD is now starting to move closer to the signal line.
If the index starts to move downward, the next support would be near 4920, which is the level of the 50 day moving average. Should the index move further down from this level, next support would be near 4600 which is the 38.2% Fibonacci retrace from the start of the index’s rise from Sep 2011 up to the index’s highest in Mar 2012.
MEG (Chart: Daily Resistance: 2.10 Support: 1.96)
MEG recently had a milestone improvement. The standing resistance line from more than a year of downward trend was broken last Mar 12, but the problem then was that there was no volume on the breakout event and so the stock price fell down below the previous resistance line.
On the next breakout event though, things have changed. The stock steadily rose to a new high for the year at 2.10 accompanied with significant volume on every step of the way. This confirms that this stock is now again the in the buy list of traders.
The recent downward movement last week was a healthy correction and we can see that 1.96 seems to be a strong support for this stock in the recent trading.
Trading for next week would confirm the strength of this stock if it continues to move upward. If it does move upward next week, I can say that this stock would be a good stock to hold if you need a stock to park a portion of your money for the long haul. It has the potential of moving up towards its previous high near 2.84 which is near 50% profit. Its short term target price would be near 2.25
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