MGT Capital Investments Inc traded on the New York Stock Exchange has been trading weak for a considerable amount of time now. We can see from the charts that the stock has not shown any clear signs of recovery since November 2012. A very common question that an investor would ask is whether the stock is worthy of an investment and that would only be possible if there were possibilities of recovery in price in the near term. Let us inquire into the possibilities that are evident at this time.
The above image shows the monthly Camarilla levels for MGT Capital Investments Inc traded on the New York Stock Exchange. As is already known from the Camarilla Pivot Theory that there are ten major price levels out of which five are supports and five are resistances. The supports are labelled L1 through L5 while H1 through H5 is the nomenclature for the resistances. We can clearly see from the image above, that the stock is trading in a zone which is within the H3 - L3 zone. This signifies an inherent lack of strength in the stock which was seen throughout February 2013. In fact, the levels for March 2013 are even narrower and the stock is still trading in the H3 - L3 window, thus signifying lack of strength. The H3 and the L3 levels for March 2013 are 3.24 and 2.79 respectively. We can expect some trend strength in the stock only beyond these levels on either side. Once any of these are broken, the stock is expected to touch the next level on the same side, which is indicated in the diagram above. The stock mat continue in the same direction or may reverse from the said levels. For the time being, we see that there is not enough strength in the stock to show any kind of trend.
The image below shows the Wolfe wave patterns that exist on the charts for MGT Capital Investments Inc. Here too we see that the stock is weak and is into a feeble bearish movement. There is an approximate rebound from the 1 - 3 - 5 line since June 2012 and then on the stock has kept on trying to touch the 1 - 4 target line (yellow). As on date, we see that the 1 - 4 target line has not been reached and that could be a possibility provided trend strength builds up in the bearish direction. Elliott wave patterns also depict a neutral bias.
Possible trend reversal days based on the analysis methods of W D Gann are as follows :
a) 130 trading days counted from the 6th of November 2012
b) 130 trading days counted from the 6th of November 2012
c) 14th March 2013
d) 2nd April 2013
The current trend is bearish and a reversal would mean a turn towards higher prices. Any of the above mentioned dates could turn out to be a reversal and once confirmed by price movement activity, the following dates are to be considered null and void. Further dates would have to be calculated once again. In case of a bullish reversal, a confirmation would mean that the high of the day following the reversal day would be higher than the high on the reversal day. A tolerance of 1 day on either side is to be allowed for considering reversals.
Keeping the above facts in mind, MGT Capital Investments Inc is not recommended for buying at this stage. Once a trend reversal occurs and the stock shows signs of recovery, the purchase could be considered.
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