Trading Day: 18th April

Note: anything in quotation marks is a reference to earlier notes that I’ve made. These comments are read in context of an investor/trader with a medium term timeframe.

S&P/ASX200 Index – XJO

The S&P/ASX200 is subdued this morning, just above 4850 points. The market is hovering just below its 15 day moving average and decelerating. Note the short term momentum oscillator on the chart below, combined with the 15 day moving average. A reading above 0% and at a slower rate indicates a pause at the moment. The Index is effectively at two speeds: BHP and RIO are falling, whilst the other industrials are holding them up.


Winners

AMP: “looks like consolidating for next move up. Long on breakout” – no breakout yet, but looks like continuing accumulation pattern.

Coca Cola Amatil (CCL): always invest in addictive products – and CCL is addictive (great company, a little too much debt, but what a story). Traders can see short term upside on CCL, investors may have missed the chance at a cheap entry price (around $11.20-$11.40).

CBA : good open, but weak intraday. Hasn’t gone below its 7 day moving average during this dip, which is encouraging for the long holders of the most leveraged retail bank in Australia. Close above $53 would likely spur a new rally.

Crown (CWN): “this looks like a fade by insto’s, but I could be wrong. Keep stops tight.” Up half a percent today but no breakout yet – sideways for the moment.

David Jones (DJS): DJ’s is having a little uptrend at the moment, but likely to be part of its medium term trading range. No reason to get excited until you see a close past $4.80

James Hardie (JHX):  small rebound rally occuring – facing resistance at $6.20

Myer (MYR): “Very strong resistance at $3.30” – but looks like busting past this level. Still strong likelihood of a trading range forming, but one to watch closely.

Tabcorp (TAB): everybody loves a battler. Nice little breakout trend developing here, but coming up to resistance at $7.70.

Telecom (TEL): up almost 3% – what’s going on here? Hmmm. Warrants closer look. Not a favourite, but may have some legs if it closes at current prices.

TEN : “coming up to resistance at $1.45-1.50” thats six days now. Tighten stops and watch closely.

WBC : like NAB, has brushed off the dip and well within its short term trend. Prices have been above resistance for almost a week now, giving weight to a new medium term trend here.

Wesfarmers : (WES) still trending up nicely on the back of WOW weakness.

Worleyparsons (WOR): “the medium term (November 2010 to now) trend is still well in place” – up 0.9% at midday. “BTFD” – and they have. Better than Leightons? Hmmm.

Avoid

AGL Energy (AGK): “but no signs of breakout here yet” – still moving nowhere. Watch for close above $14.40 for new trend to develop.

ANZ : steady, after dipping last week. Probability is bullish sideways – possible bull put spread at $22.50. Puts getting more expensive for bank bashing “Keen” observers.

Alumina (AWC): coming up to medium term support levels, but could develop into a short today (traders have been riding it down for a week). Down 1% today

ASX “Bottom pickers get your fingers ready” – decelerating. Almost good value at $33, but beware the value trap. (a bull trap for intelligent investors)


BHP-Billiton (BHP) what’s going on here? In a word – exuberance. The early April rally was too fast, and has now come back down to a control/pivot point around $47 level. Be wary that BHP has not breached its all time high – resistance at $49.50-$50 (similar to the 5000 point on the ASX200) is strong with this one. A breakout beyond this level for both the index and BHP (but I repeat myself) would encourage all the Olivers, Carr’s and other dreamers wanting 5500 points by end year.

Boral (BLD): “Could breakout from here” – still not yet. Patiently waiting for a US housing recovery. You could be waiting a while.

Fortescue Metals (FMG): slipping, but still around point of control/central oscillating point

NAB : “Out. Schnell.” – but keep an eye on it. Has brushed off the IT issue quickly and is merely pausing. Cheapest bank of the four based on forward P/E valuations, which means nothing but keeps brokers excited.

Origin Energy (ORG): “No more buyers here.” “but as I said earlier in the week, good time to book profits” Down another 1.4% – you did book those profits didn’t you? Classic exhaustion top and is now reverting to mean/point of control around 16 bucks.

QBE“market is unsure what’s happening. Avoid until price breaks.” Up slightly this morning, but not exciting enough for me. QBE will struggle to get past resistance at $19 – for good reason – its too expensive.

Rio Tinto (RIO): “My gut is telling me we are in for range-bound trading in the short term.” My gut is wrong – down another 0.5%, but still on positive momentum – so no entry for a short. Yet.

Sonic Healthcare (SHL): six days in a row now – hitting resistance at $12.60 level. Classic “time stop” – although it may break out from here, short term traders should book profits. Investors should have a long hard look at themselves and ask why you bought it in the first place. Read Q’s healthcare stocks article – ASAP.

Woolies (WOW): WOW’s Q3 sales came out today, with some commentary provided by Q Continuum here. “medium term bearish sideways stance, but has very strong support around $26. Aggressive traders could sell Bull Put Spreads with upper strike of $26” – up almost 1% on today’s announcement and back to its point of control/central oscillating point. Still a favourite, even if they make money off pokies – which to me, is the worst imaginable form of gambling. No fun whatsoever, unlike poker, blackjack and trading.

Losers

Bluescope (BSL): “Finding support at $1.90” – good fall further from here, but neither an investment stock nor a shorting candidate. Just a loser. A backdown by PM Gillard on the Carbon Tax could see a reversal in fortune, but a low probability.

Caltex (CTX): “Watch closely if it closes below support at $14.80” – BAZINGA. Down almost 2% – I like this one!

Computershare (CPU): “Its the medium term trend that matters here” – which remains down – 1.3% drop today. CPU’s intangibles are slowly being deflated, for good reason.

CSR: unchanged today, but pattern appears to show a bottom (giggedy) – but prices still below support. Caution here.

Fairfax Media(FXJ) up slightly on the open, but bears look like they are in charge in the medium term, for good reason. The poor investment grade space for media stocks is getting crowded.

Gunns (GNS) – closed down 1% yesterday, another 1% down today.

Harvey Norman (HVN): up 0.3% and finding some support at $2.85 region. Still nowhere near coming back at this stage.

James Hardie (JHX): up 1% – tighten stops but momentum is against the trend.

Macquarie Group (MQG): down another 0.5% – keep the faith and short the squid.


Onesteel (OST): down almost 0.5% – don’t fight the trend or the Carbon.

Qantas (QAN): The Flying Kangaroo is still hopping/bouncing along – after a night of spotlighting….. Investors stay clear as ever.

Suncorp (SUN) stay on target – but finding a small bottom here. Below $8 is still my target sell zone.

Westfield (WDC):”support at $9 will be likely target.” still bouncing around there.

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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