Thursday, October 2, 2008

READER'S REQUEST - McDermott Int'l (MDR)

(click chart to enlarge)

I wrote an article on Seeking Alpha, a sort of a warning, in August that MDR would hit $26 as support, which it did. The pattern broke down and completely failed which is an automatic bearish signal. Using technical analysis, this decline could have been avoided. Here were some clues (in order):

-Break in the 50-day MA
-Break in the 200-day MA
-Bearish moving average crossovers

After that, it was over. There was (is) not reason to hold the stock. Let's look at a 3-year chart:

Doesn't look good at all. I'm not saying that MDR will hit sub-$15 BUT the possibility is extremely high. After $20, there are no more major support levels left. In fact, on the next slight pullback, MDR would be added to my shortlist.

Don't forget to try out the Free Trend Analysis. It's FREE, so give it a shot!

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