Freightways - FRE

[Mothman]

Whats up? FRE up another 2.6% today already!

[Mothman]

I am considering taking profits at this stage but:

* Freightways has just made an all time high
* Something could be up (which will increase the price further)

Quite a nice rise from early October

Phaedrus are you able to post a chart and your comments please?

[Seiya]

It is down -10 so far today. Anyone knows what is up?

Disc: Waiting on the side line to get in

[BRICKS]

BEWARNED, TOLL is looking to add to its collection and FRE mite be a CONTENDER.. [8D]

[monopoly]

Phaedrus,

As I mentioned on the NZO thread I'd respect your opinion on the FRE chart. Its traded nicely in an uptrending channel over the last few years but has recently peaked to the upside outside the channel and currently to the downside outside the channel. OBV seems to be still solid (and has looked worse in the past where major sell downs have occured).

From a FA standpoint growth has slowed but still positive and they are laying the foundation for future growth in both different businesses (post and doc mgmt) and markets (Australia).

For me the 2 views don't seem to be adding up. Would appreciate your view on thew TA outlook.

Regards

[Phaedrus]

Mothman, I have only just now noticed that you asked for this chart 9 months ago. Here it is, finally, by way of Monopoly. I believe this is my record for tardiness.

FRE is a sound stock that has been hit fairly hard lately. The chart looks quite similar to those of GPG, PPL, FPH and others. All of these stocks were in steady, very satisfactory, uptrends - until their long-term trendlines were broken. What to do? Personally, I sell and ask questions later. Staunch fundamentalists re-examine their selection criteria, observe that the stock is still fundamentally sound and do nothing. The more confident might even buy more. After all, the company is still exactly the same as it was before the current weakness - right? The value is still there, unchanged - even enhanced. This is just another example of the market getting it wrong.
I do not see selling as a vote of no-confidence in the stock. I can buy back in anytime I like - perhaps at a much lower price than that at which I exited. In the meantime, I have in effect taken out an insurance policy on my gains. They are safe, no matter how far the market falls. I monitor market indices very closely, using them to control my overall market strategy. Right now, I am in "Caution" mode. This decrees that I MUST act on all Sell signals. So, for me, if I am to keep to my system, hanging in there and doing nothing is simply not an option.



This chart clearly shows the break of the long-term trendline - one that had been confirmed many times over the years. I could have added a multitude of other indicators, all showing essentially the same thing, all firing off Sell signals as the uptrend weakened and ended.
I have shown a "20%" Trailing Stop. You can see that this has not been hit - yet. Consider this, though. If/when the trailing stop IS hit, those acting on it will have given over 20% back to the market since the FRE high. To my mind that is a lot - way too much. A trailing stop is better than nothing, but it is no substitute for a more comprehensive trend-following system.

The OBV (not shown) continues to rise. This stock continues to be accumulated by committed investors. They are buying as the shareprice slides - and paying for it. Just as all uptrends end, so too do all downtrends. This one will end, offering good buying opportunities sometime in the future. Who knows how far world markets will slide? In the meantime, your FRE money is safe. When the time comes, you can emerge from under your stone, flush with cash and able to afford a bigger stake in FRE than you had before.

[kissssik]

The odds are 19x greater for a company to go bust where a board member has been involved in a previously failed company...Source D&B New Zealand Eyes open as always.

[monopoly]

Thanks Phaedrus, you highlight well the different decision making processes for FA v TA. I'm generally happy with my entry decision making (which is FA/Buffet biased) but quite unhappy with my exit decision making. I recall reading once that your entry and exit descions should be based on the same criteria. I do however get the feeling that TA provides better exit calls as it tends to be a leader on FA info (unless of course you are a big player and privvy to timely information and rumour). It is for this reason I find myself concerned about the current chart more so than the fundementals.

Fundementally FRE is still a good company, well managed and financially strong. Lower earnings reflect there recent acquisitions which shows their eye to the future. The are holding up well in the current sell off.

Also thanks for your comments on the weekly OBV on the NZO thread. Perhaps it indicates weekly traders at work??

[tobo]

Is that a break in the 4 month trendline I see?
- obot

[Lizard]

I notice at least one broker upgraded recommendation to accumulate on the back of yesterdays result - mainly just on the basis that they seem to have passed the low in the cycle. However, I like my recovery stocks to be either very cheap or have a higher proportion of fixed costs that makes for more rapid upswing in margins.

By my measure, FRE is over-priced at $2.81 current - a fairer price would be somewhere below $2.20.