Construction stock Murray & Roberts Holdings (M&R) has given an important upside break-out on its chart. This is a significant event, and should see it continuing up over the months ahead.
M&R: Bullish breakout
Trend: Short and medium term up. Long term sideways.
n Last week M&R broke out of a sideways channel (lines 1 and 2), after moving sideways for a long time. This is the first real sign of a recovery to come.
n The stock’s short-term relative strength index (on top) is nearing an overbought level, but any minor pullback is buyable.
n Medium-term players should start buying now, and add to that position if it gives a minor pullback, say, to R27/R26.70.
Shorter-term players should ideally wait for such a two- to three-day pullback to buy on, but you can buy some now, as long as you do not mind holding through a pullback if we get one.
n The minimum target is R32.80. But given the length of its channel (lines 1 and 2), a move to R40 and above is more likely over the months ahead. From there we will re-assess.
n Place your stop loss as a closing price below R25.
Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, go to www.themarket.co.za.