Things do not look good for Murries. The crucial, long term support level at 37.50 broke with a bang. The price is oversold now but any retracement to 37.50 will be met with lots of selling pressure. We don't have any Murries in our portfolios and we won't be interested in buying any before at least a 50% drop from current levels. The first major technical support level is around 15.
What does it say about a government if companies who get a tender to build infrastructure, do not get paid for work done? When will they get paid? The answer to this question will determine the value of the shares.
The Dow Jones is still above short term support. After the bearish reversal candle of last week we should be on edge and monitor stops closely. The stop is at 11700 and we believe that a break of short term support can lead to a selloff to around 11000. That implies a drop of 7%, which is ok for long-term investors to bite the bullet, but there is no way to have certainty that the decline will stop at 11000. That support may also break, so we feel that the most prudent action will be to take our stops when signalled by the market, and buy back the positions when support is confirmed.
That is the only way in which we can protect capital and exploit opportunities in an uncertain environment. This method has been proven time and again to add value over a buy-and-hold strategy. (Those in doubt may enjoy reading "Trend Following: by Michael Covel)
