Tuesday, November 3, 2015

Who is selling Constellation Software?

I was scanning several TSX sectors for outperform through year end and decided against the iShares S&P/TSX Capped Information Technology Index ETF (XIT) which seeks to replicate the performance of the S&P/TSX Capped Information Technology Index. When you look at the top 5 components by weight – you find CGI Group (GIB.A), Constellation Software (CSU), Open Text Corp (OTC), Blackberry Ltd (BB) and DH Corp (DH).

The technical problem is Constellation Software (CSU) – which closed at $550.87 today – down $15.61 (-2.76%) on 47,000 shares - it is a thin trader. Someone has been selling CSU for several weeks now – ever since the July 24 volume spike. Our daily chart of CSU suggests caution. We can see the double tops of July 29 and Sept 2 along with a flat to declining 50-day simple moving average.

The other negative issue is the declining money flow numbers. Those thin traders all have a common problem – you have to chase the offer on the way up and you have to chase the bid on the way down

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