Last night our own Jim Cramer sat down with Don Walker, CEO of Magna International Inc., during his popular "Mad Money" program. Magna (MGA) , a maker of auto body systems and assemblies, missed its numbers in the second quarter. Walker said that despite missing consensus, Magna saw record sales and earnings in the quarter. Fundamentals are important to a successful investment approach, but let's look at the charts and indicators this morning.
In this daily bar chart of MGA, below, we can see an uptrend from last August. Prices tested the rising 200-day moving average line in February and March and again in July and earlier this month. The other day, MGA gapped below the 200-day line on heavy volume. In late June the chart started to weaken with prices closing below the flat 50-day moving average line. The slope of the 50-day line turned bearish by the middle of July.
The daily On-Balance-Volume (OBV) line gave us a heads up in early June as it made a lower high when prices made their May/June small double top. The Moving Average Convergence Divergence (MACD) oscillator gave a take-profits sell signal in May and an outright sell signal in late June when it fell below the zero line.
In this weekly bar chart of MGA, below, we can see that prices are now below the flattening 40-week moving average line. The weekly OBV line has weakened from May and the MACD oscillator is bearish and on its way to the zero line.
In this Point and Figure chart of MGA, below, we can see that the trade at $55 was a sell signal and a $48 price target is being projected.
Bottom line strategy: MGA saw its zenith in May and is still in a weak technical position. A test and break of the February/March lows in the $52 area is likely. The Point and Figure target is $48.