Wednesday, December 29, 2010

What Now for Supervalu? Buy, Hold or Sell?

I have invested half of my capital in this stock at $9.16. So after more than a week, the big question is what now? Will the stock continue to go up from here after a small gain to $9.26 or will Supervalu continue its downward trend? Is Supervalu is really super value now? Well, I hope my technical analysis skill that I have acquired for more than 10 years will help me answer this question. 

I will not analyze this stock based on A-E section that I have indicated on the above chart.

A- Based on the candlestick indicator, it is currently showing a positive outlook. I believe that within 2-3 days more, this stock will shot up with at least a 3% gain.

B- After a small climb from the $8.80 level, the stock now is consolidating at the $9.20 level. The decreasing in volume show that after this small run up, the selling has been well absorbed for the next upward surge. It shows that they are no more selling or has been reduced an the operators is slowly and quietly accumulating the stock for the next upward surge.

C- The MACD histogram show a slight negative indication because the last bar is red, therefore, it is not a good sign. However, I believe that this is only a very small indication on the downside which does carry any weight.

D- As per the MACD line, the blue line is still very much on top of the red line, as long as the blue line is on top putting pressure on the red line, I can definitely sleep well at night and hold on to my darling - Supervalu.

E- Stochastic indicator is now showing a 50-50 indication on whether this stock will move up or down. The blue line is currently touching the red line and it is quite worrying for me actually. Stochastic indicator is a powerful indicator to detect the shift of trend line. I rely on this indicator quite often. As for the current status, I don't have a clue what will happen cause it is currently at the 50-50 cross road.

Based on the above analysis, I am very confidence that Supervalu will continue its upward move within these few days. However, if I am wrong, I will not hesitate to chop off this stock from my portfolio at once. Even thought I believe that the percentage gain for this stock can be 3-4 times more than fundamental stock like Cisco, Supervalu is still a risky stock with very high debt. Therefore, this is a stock that I will take immediate action once I think it is failing me.

As for Cisco, which I have parked my other half of my capital in this stock, I will continue to hold until I have realize at least a 10% gain, no matter what the short term move for this stock is.

Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in The Market Oracle Blog is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence. 

1 comment:

  1. Super value has a lot of problems. The stock took a big hit not to long ago Its trading around 4 the last time I checked.


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