During the Lightning Round segment of "Mad Money" on Tuesday, a caller asked Jim Cramer about Magna International (MGA) .
"I love this company so much. This one is a winner. Every automaker should be using them," replied Cramer.
We last looked at MGA on March 19 and wrote that, "Aggressive traders could go long MGA on a dip just below $90 (if available) and then risk a close below $80. The $100-$104 area is the first price target followed by the $144 area." Let's see how that recommendation stands.
In this daily bar chart of MGA, below, we can see that traders were able to buy MGA just below $90 and also they have been able to take some profits in the $100-$104 area. MGA has since declined below the 50-day moving average line. The On-Balance-Volume (OBV) line has weakened so far this month telling us that sellers of MGA are now more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero-line for an outright sell signal.
In this weekly Japanese candlestick chart of MGA, below, we can see a bearish engulfing pattern at the beginning of June. The slope of the lagging 40-week moving average line is positive. The weekly OBV line is rising but shows a minor dip in June. The MACD oscillator has crossed to the downside for a take-profit sell signal.
In this daily Point and Figure chart of MGA, below, we can see a potential downside price target in the $75 area.
Bottom line strategy: It looks like MGA can correct further in time and price. Stand aside for now and let's see if we can get a better buying opportunity in the third quarter.
