CSL – A chart review

By Kenneth Robson on January 22, 2016 • ( 0 )

Disclaimer

This post examines the present market standing of Australia’s leading Healthcare stock, CSL (Commonwealth Serums Laboratories) from a technical perspective. It should not be construed as constituting investment advice. Professional advisers should always be consulted for guidance specific to their needs.

The observations and opinions expressed are those of one observer looking for investment rather than trading opportunities. Share prices are in constant flux, and should continue to be monitored.

How much further will the CSL share price rise?

CSL would have to be the perfect stock for Buy and Hold Investors as this 20 year Monthly candlestick chart demonstrates, courtesy of Incredible Charts.

The long-term picture

csl_ax29jun94_to_29aug17

The share price is at an all time high today reaching $108.27 in intraday trading. The chart above does not show it, but the share price reached $100 several years ago, prior to a 1 for 3 share split October 2007. Such has been CSL’s growth that the share price is now back to its former level prior to the split!

The short-term situation

This is a 12 month daily candlestick chart supplied by Metastock with data from Paritech.

CSL Dy Jan16

It shows that CSL has been in a strong uptrend in the past three months of trading, that contrasts with general market falls. With the share-price at record highs, the RSI indicator is now touching the over-bought zone above 70, and some traders may be contemplating shorting the stock in anticipation of a pull-back below $100.

Discussion

In my opinion it would be a very risky strategy to try to go against such a strong trend by shorting.

Many of the safest and best investment returns for retail shareholders are achieved by taking positions in stocks when they reach their highs.

An important technical observation is that the share price is now finding support at $102 a level which marked resistance of a previous high. So long as this support level holds it is reasonable to expect the uptrend will continue.