Magna International Inc. (NYSE: MGA) daily chart for 3-12-2012

Magna International Inc (NYSE: MGA) stock breakout may be on the horizon

Magna International Inc (NYSE: MGA) stock may have a breakout on its horizon; problem is, the price-time chart shows the stock in a trading range, so it may be difficult for some to choose the direction of the breakout without further investigation.

The daily stock chart for Magna International Inc. already shows a pattern of multiple price channels, which have already been broken out and even tested. Regardless of how long the patterns may take to form, stock breakouts from price channels are by nature inevitable; and that is the condition we see with the present price pattern of Magna International Inc. (NYSE: MGA).

However, the direction of a breakout is not an exact science. That is why every serious trader knows that before making any trading decision, a choice has to be made as to which side of the trade you believe gives you the highest probability of success. So, applying that logic to Magna International Inc. (NYSE: MGA), you have to decide whether to prefer the short side of the market, the long side, or perhaps not be in the market at all. For those with option experience, a straddle or a strangle in this case would help alleviate any anxiety.

Stock Fundamentals

Magna missed big time on the last quarterly earnings, reporting $.32 when the estimate was $1.02. More important, though, was the market’s reaction. There was no giant sell-off; and that by itself was a bullish sign that traders were looking beyond.

From the aspect of company fundamentals, though, Magna International Inc. is a diversified global automotive supplier. It designs, develops and manufactures technologically advanced automotive systems, assemblies, modules and components. It even engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks.


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