Henderson Group PLC (ASX:HGI) is a financial services group that sells a range of products focused on asset management. The company is headquartered in London and is listed on both the Australian and London stock exchange. It is one of Europe’s largest investment managers, and is also present in Asia and the US.
Despite the large sell-off that has occurred since last November on the ASX financial sector (XFJ), there are a few stocks that succeed to escape the broad credit crisis and global uncertainty and mistrust climate. HGI is one of those stocks.
Well, actually the stock also strongly suffered from the equities markets turmoil between October 2007 and February 2008. It declined by 56% during this period (between points D and A on the chart). However while the XFJ Index continued to fall after February, HGI posted a medium-term low, rebounded and is trading now in a positive consolidation channel.
Indeed, the medium-term low price of February 15 at $1.90 was posted on a long-term support line that is valid since 2005. Since February, the price action has posted higher lows on this slightly bullish support line (points B and C). There are typical rebound opportunities when price hits this support.
Since July 15 (point C), the stocks has been bouncing back by 35%. Both price and volume increase, there is therefore a bullish momentum which may drive the price higher.
The MACD is bullish as it has just triggered a new fresh positive signal. The OBV (On Balance Volume) is also bullish. OBV is a momentum indicator that measures positive and negative volume flow.
Remember that the basic assumption, regarding OBV analysis, is that OBV changes precede price changes. The theory is that smart money can be seen flowing into the security by a rising OBV. When retail investors then move into the stock therefore both the security and the OBV rise.
Once a trend is established, it remains in force until it is broken. There are currently no technical indications that argue for a trend completion. However on the very short-term, an overbought configuration may occur as the stock has been climbing at a fast pace for 2 weeks.
The main target for this bullish move is a previous support line that had been cleared in December last year, where the price action had posted lows. Previous lows become new highs. That’s why the objective is set around $3.4 on the medium-term.
Good Investing,
Gabriel
