Sm Holdings Technical Analysis

SM Technical Analysis

What happened?

From October to april SM showed signs of what we perceived to be a rectangle and this was anchored by huge volume sometime in mid-march which would partially explain the uptrend it had from april to june. Also notice that stochastic at that time, was way below 30 and was poising for a breakout. Momentum Indicators [particularly MACD and RSI] were also showing bullish signs…

Momentum indicators

What will happen (short to mid-term)

Currently the MACD is bearish since it is trading below its signal line [red is below blue hahahaha]. Also RSI is normal but notice that though stochastic is showing a double bottom, more recently it also showed signs of a head and shoulder movement which may indicate that the stock would decrease the size from the neckline to the head. But looking at the closing prices’ graph we see a cup with handle pattern which indicates a bullish trend for the mid-term and our target price is the size of the peak of the cup to the bottom of the cup which would place it at 360. [note that the recommendation is to wait for it to correct down before buying with a target price of 360].

What will happen [long term]:

After the fall which can be explained from the head and shoulder formation from ’07 to ’08 we see a clear rounding bottom highlighted by a double bottom [and a higher low at that] which implies a highly bullish trend in the long term. [again rsi, macd and stochastic are still a little high]. Using the height of the rounding bottom to its peak we perceive that the stock price would reach a high of 460-480