Trading Day: 11th April (updated)

Not my desk...

I will be providing this trading update on the ASX100 daily at noon.

Winners
AMP: overbought in the short term, but accelerating in the medium term after a rounding bottom. BTFD
ANZ: uptrend is slowing down. Watch for acceleration on external market rallies.
BHP-Billiton (BHP) up up and away. Becoming overbought in the short term.
Boral (BLD): consolidating for a possible upmove? Support at $5 level
Commonwealth Bank (CBA): after a small dip, reflated trend continues.
Fortescue Metals (FMG): Japan correction is over, in steady uptrend. Watch for resistance at $6.90
Lynas (LYC): still in strong uptrend, but not overbought. Appetite is not weakening for REEM.
Macarthur Coal (MCC): rebounding nicely after the Japan/MENA correction. Look for support over $12 to continue.
Newcrest (NCM): on a tear as gold and AUD tear it up
OZ Minerals (OZL): noticing a pattern of resource stocks yet? Good uptrend, far away from resistance.
Primary Health (PRY): is domestic healthcare the next big thing? Looks to be consolidating after good uptrend.
Ramsay Health (RHC): another popular healthcare stock – trying to break through resistance at $19.
Rio Tinto (RIO): opened on a gap and has rallied since, about to hit long term resistance at $89.

Avoid:
Iluka (ILU): nearing the end of its parabolic 2010 rally. Overbought on all indicators and timeframes, but the market can remain stupid for a lot longer. Stand aside.
Leighton (LEI): trading halt on back of bad news and capital raising, but has been in medium term downtrend since December 2010. Might surprise on the upside….
Myer Holdings (MYR): about to fail its support at $3.08? Or will the insto’s come in and bid up? Careful here.
National Australia Bank (NAB): resistance at $26.50 – can it break through?
Orica (ORI): inside bearish day – take care (which means take profits)
Oilsearch (OSH): what’s not to not like about oil these days? Overbought though.
Origin Energy (ORG): as above – again, overbought and last 2 days action is toppy and gappy. Never a good sign.
Paladin (PDN): nuke it.
QBE: totallly rangebound, great for spread writers, avoid for direction.
Santos (STO): in a parabolic trend: only for the brave to keep riding this.
TEN: another dog comes back to its kennel after a rebound rally, but still in sideways bearish stance.
WAN: the half-life thoroughbred will probably survive its marriage to Seven, and the insto’s will likely bid it up (what else have they go to do?) Stay away though.
Westpac (WBC): although it has broken just past resistance, WBC is still in a year long trading range, reflecting its underlying value (i.e well below May 2010 highs when the housing bubble popped).
Woodside (WPL): derr…Today’s action is, well, illustrative.

Losers
Bank of Queensland (BOQ): struggling to rebound from floods. Meeting heavy resistance.
Billabong (BBG): descending triangle, losing support. Another AUD casualty.
Bluescope (BSL): tried to rebound from recent lows, turning down again. Strong AUD not helping here.
Caltex (CTX): in a dip and struggling with refiner margins? Watch closely if it closes below support at $14.80
CSR: failed rebound rally – watch for action around $3.20 if support comes in to buy up.
Harvey Norman (HVN): the bogan’s bogan is dropping fast as no one believes the Adam Carr “consumers are awesome” thesis. Support at $2.82 but could fall to March 2009 lows ($2)
James Hardie (JHX): dropped below local support and has failed its descending triangle pattern. Some support below $6, but watch out if failed.
Macquarie Group (MQG): the upside down vampire squid is falling fast. Watch for break of support at $34. Great stock to trade, wouldn’t own it in any millennium.
Onesteel (OST): small rebound rally has petered out, returning to medium term downtrend.
Newscorp (NWS): the other vampire, has dropped fast in the last 5 days, but still rangebound between $17.10 and $18.30. This is common behaviour. Watch for bounce off support in coming days.
Qantas (QAN): love to fly, love to trade it, wouldn’t own it. Failed rebound rally, dropping like a Rolls Royce engine. Support is nearby though. This Frequent Flyer business with an airline attached is struggling with fuel prices.
Tatts Group (TTS): resumes its medium downtrend after a small rally. Support at $2.18
Westfield (WDC): another retail stock that goes against the Carr-thesis. Some support below $9, but it doesn’t look promising.

Oh My Darlings
CSL and Cochlear are struggling at the moment. One day does not a trend make (they are both down over 2%), but as Sell on News reports on Macquarie’s warning of Dutch Disease, these two healthcare stocks are catching a cold.

The Index
The S&P/ASX200 is up almost 20 points, or .2% to 4960 and is heading for the magical 5000 point level. The V-shaped rebound is slowing down, but as the “Long” list above notes, the resource stocks (which make up a large amount of the index capitalisation – unfairly, in my opinion), are on a tear – because of commodity prices and inflation fears – and it appears the banks are brushing off bad news like fleas. Watch this space.

The XJO - slowdown of the rebound and approaching resistance.

Disclosure: The Prince is a full time equities trader, running a personal account. I may have positions (long and short) in some or all of the securities mentioned above. This post is not advice or a recommendation to buy or sell. Do your own research and consult an adviser before allocating capital.

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Comments

  1. RE: no one believes the Adam Carr “consumers are awesome” thesis.

    Adam has spoken to the common man, and he hears no pessimism…

    On the street it’s a different matter. I’m talking to your average man – traders, tradesmen, business people, retailers, restaurateurs, architects, etc. You know, the people that you meet when you’re walking down the street. None of them are seeing all the pessimism that is frequently plugged to us. They are certainly reading about it, but seeing it? No. The reality is there is not much wrong. Interest rates are still low by historical standards, barely restrictive actually, the unemployment rate is low, consumer spending is robust and so it goes.

    http://www.businessspectator.com.au/bs.nsf/Article/jobs-economy-RBA-interest-rates-retail-pd20110411-FST46?OpenDocument

  2. Thanks

    Appreciate your views.

    I look at management and products. Nothing appealing on both scores. Watched AMP for some time but alas the ‘fear’ of losing capital directed me into a nice position of cash and bonds. Only play with a small portion now and very dubious of everything and everybody.
    Sovereign debt the biggest concern .. interesting to see how Courts deal with Iceland. Then if Spain / Belgium have a short reprieve by Bond market .. then Ireland, whether the Government will have the balls to give the bond holders a haircut, or do the same old same old. Japan and the impact on GDP / Loans / Rates and the Yen .. latter to important for the carry trade to dismiss.

    Far to many black swans flying north …

  3. Thanks Chris

    I would be interested in further details of your ‘spread’ trades if you could point me in the direction of a previous post? I seem to remember one a couple of months back)

    Nick

    • Oops, sorry Nick – didn’t see your response there!

      I have some posts on spreads on my hibernating old blog – http://birchcreektrading.blogspot.com/

      Ill be doing a series on trading techniques in the future and will go over spreads. I find them to be high probability, low payoff trades for times when directional trading is in a funk. I experience this from time to time, so its good to have some spare tools in the box to cover sideways trading periods: it pays the bills lets just say!

  4. The XJO has barely moved for 18 months whilst many international indices are actually moving up in general (e.g. DAX, S&P500, etc). Does this behaviour concern you with buying/selling stocks on the ASX?

    • Andy, you can’t forget the effect of the AUD – look at the two indices in USD (or AUD) – both the S&P500 and the ASX200 have almost the same total return (price and divs) from Jan 2010 to now (up 22-23%)

      • The Dow/S&P have moved a lot more since their bottom from the GFC though. This is quite odd considering the state of the US economy?