Despite the glowing reviews, I see weakness in the chart for REA
We have traded REA before for our clients last year, buying at the June dip and then taking profits as it hit resistance near $50. It managed to break that and rally to the mid $50's but that was short lived. REA reversed last month and formed a "bearish engulfing pattern" which is circled on the weekly candlestick chart. After trending higher for a while, the appearance of this reversal sign now indicates weakness for REA over coming months. The market's reaction to their results was also disappointing, selling the shares down on large volume. REA is sitting at support here so it may have a small bounce in the short term, but we would be mindful of a break below this current support level. We would expect to see lower support levels come in near $45 and then at $40. At Fairmont, we believe that this mismatch between fundamentals and technicals is a sign to stay away for now.
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Michael Gable is managing director of Fairmont Equities. We are a small boutique advisory that uniquely combines both fundamental and technical analysis. As a result, our analysis is featured regularly in the finance media such as the Australian...
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