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NOL: Is the worst over?

Wednesday, December 7, 2011

Despite negative sentiments towards shipping companies, NOL's chart is showing signs of bottoming. If it has not bottomed, it has certainly found a floor and a rather strong one at that.

The long white candle formed today was on the back of relatively high volume. Fibo lines show that $1.175 is a rather strong resistance and if we could overcome this convincingly, next resistance levels are at $1.19 and $1.205.

The MACD has formed a higher low and has once again ventured into positive territory. Momentum has once again turned positive, if only barely so. The MFI is set to form a higher high which suggests a return of demand. Being above the 50% line, we could see some support afforded by this line in case of a retracement in price.

For a longer term picture, look to the weekly chart for clues. The MACD has been rising since the middle of August but it is still in negative territory. The MFI is currently supported by the 50% line. It also looks like we could be seeing the formation of a double bottom.

More importantly, for the first time in a long time, price is above the 20wMA. The week, however, has not ended. So, the situation is still fluid.

A pattern is not formed until it has formed, of course. However, the worst could be over for NOL.


Ray said...

From a FA p.o.v, the worst is yet to come for cyclical companies like NOL. Their next FY's earnings can only be worse.

AK71 said...

Hi Ray,

Fundamentally, it does seem like there will be more bad news for shipping companies.

Technically, however, things are somewhat encouraging. ;)

Serendib said...

NOL is a perennial laggard in the business. With rates sagging and a huge order book of new builds (and NOL were the last to order), there's still more pain to come. Operators of Smaller container vessels will perform a little better

AK71 said...

Hi Serendib,

I agree that things certainly do not look good for NOL, fundamentally.

Let's see if I can make some pocket money here or if I would have more shares put in cold storage. ;p

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