MF Global looks pretty ugly on the weekly chart. The market is trading lower this morning and appears to be headed toward an even further decline. Only a weekly closing price reversal bottom can save it at this point.
Weekly MF Global Pattern, Price & Time Analysis
This weekly chart shows it trading inside of a Channel Down chart pattern created by a pair of downtrending Gann angles from a pair of main tops. The upper boundary or downtrending resistance line is at $5.49. The lower boundary or downtrending support line is at $1.08.
A close at or near the low for the week is going to be a strong indication of lower prices to follow. A trade through $1.08 could trigger an acceleration to the downside. On the upside, even though a trade through $5.49 will be a sign of strength, it will not mean that the trend has turned up. This will only occur if the swing top at $8.09 is taken out.
Fundamentally, MF Global is rumored to have too much exposure to sovereign debt. Moody’s also cut its debt status to junk. Some customers have moved their business elsewhere while others are being courted by competitors. The firm has reportedly hired an investment firm to find a buyer, but who would want to take on a firm with so much sovereign debt exposure? Goldman Sachs? There is a connection since the current CEO Jon Corzine used to work for them.
