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.
The S&P/ASX200 Index – XJO
The S&P/ASX200 has bounced back slightly this morning on reflated overseas markets, up 0.7% around midday. As I said yesterday, the market is by no means oversold, and is still within a short term downtrend channel.
This trend is still in its downward channel. Don't get excited yet.
The market remains in a long term sideways pattern. I continue to sound like a broken record, but only a breach of 5000 points will signify a new bull market in stocks, not a rebound rally. With the end of QE2 approaching and the banks facing earnings pressure and the big miners seeing a possible top in commodity prices, whats the likelihood of that coming to pass?
(A Note on QEasy: lless than $US100 billion is left to print/swap/debase, and even reinvesting the matured Treasuries will only yield ca. $11 to 17 billion a month. A bit less than the average $70 billion pumped in each month since August last year.)
Winners
Coca Cola Amatil (CCL): “Resistance above $12 may be the killer” – up 0.6% but still in its short term trading band. Great company, but slightly overvalued at current prices.
CBA : “Lots of institutional and retail punter support for the “market leader” in Ponzi finance” – dip? what dip? Consolidating for up-move, but pressure is mounting on the banks. Use any rally from here to check out the low cost of long term puts.
Crown (CWN): down a little this morning, like the rest of the market, getting back to its central oscillating point. Watch for close above $8.50 for new trend to resume.
David Jones (DJS): “No reason to get excited until you see a close past $4.80” – up almost 0.5%. I want to believe in retail.
Tabcorp (TAH): “Nice little breakout trend developing here, but coming up to resistance at $7.70” – yep, up 1.5% this morning and may close past resistance. I love it when a plan comes together.
Telecom (TEL): “want to see more momentum before joining the self fulfilling crowd” you got it boyo – up 3% today.
WBC : “Prices have been above resistance for over a week now, giving more and more weight to a new medium term trend” – I’m watching WBC closely as it has a lot of price support, although the moving averages are stacking (a bearish signal) and directional movement is slowing down. Short term price behavior supports an ongoing trend thesis. What do you think?
lots of support here
Wesfarmers : (WES) up 0.5% today, but I’m wary as its hitting short term resistance at $33.20 for five days now. If you believe that Coles is bashing Woolies, and I do not, than stay the course. WES remains a company with poor capital management that eventually will be reflected in its long term share price.Worleyparsons (WOR): “the medium term (November 2010 to now) trend is still well in place” – but going sideways. Tighten stops if long.
Avoid
AMP: “Short term trend is over but medium term return to growth is not over yet” I think this is a pause in AMP’s reflation pattern. Wait.
ANZ : “reverting to mean trend/point of control at around $23.50”. Yep – there this morning.
ASX Now below value at $33, but still beware the value trap – (a bull trap for intelligent investors)
BHP-Billiton (BHP) “we need a breakout beyond $49.50 for the whole index to get past the magical 5000 level” – up 1% this morning because what else are you going to buy? Still overbought.
Boral (BLD): still in a trading range ($4.95 to $5.20) Wait for a breakout either side
Bluescope (BSL): “Finding support at $1.90” looks like found a bottom, up half a percent. You really want to touch this?
Fortescue Metals (FMG): sideways. No action yet.
Harvey Norman (HVN): still trying to complete its bearish correction from October last year. Avoid.
Macquarie Group (MQG) “might be time to cover this squid as support is heavy at $34” – indeed. MQG could rebound sharply if a new rally takes off in the broader market. Institutions are watching the relative strength of MQG to the index (and the fact its down nearly 50% since its October 2009 highs)NAB : “Could be one to re-enter if this dip reverses” – up slightly this morning, but still a sideways bet.
Origin Energy (ORG): “you did book those profits didn’t you? Classic exhaustion top” – gapped down 1.77% this morning. Someone was listening. Stand aside for now.
QBE “QBE will struggle to get past resistance at $19 ” still sideways. Wait.
TEN : “you should all be out by now, as TEN is still in a bearish sideways long term trend” – yep, slipping again. There’s no love for ONE (or was thought Nine? Who watched Paper Giants on ABC recently? Great series. Why anyone watches commercial TV is beyond me, I only watch ONE for the GP racing)
Woolies (WOW): down slightly, continuing to be sold off by – well everyone. $26 puts remain well priced for investors – remember the 100 shares to an option revised contract comes in May….
Losers
AGL Energy (AGK): “still moving nowhere” – rebound rally has failed, up slightly on the open, but still a poor contender.
Caltex (CTX): “down to support at $14, could bounce back a little” – steady at $14. Time to cover the short term downtrend, but not a time to invest.
CSR: up 1% this morning and decelerating. Tighten stops.
Fairfax Media(FXJ) remains in medium term downtrend – but is consolidating for a possible up-move. Up 1%.
Gunns (GNS) – down another 1% today. Support coming up shortly, but no reason to get out yet.
Onesteel (OST): up almost 1% this morning, but stay the course.
Qantas (QAN): The Monkeys are back picking bottoms on QAN – Joyce is having a hard time with the unions. Did I mention that airlines are a poor business before? I’m going to “upgrade” QAN to Avoid, as in – don’t touch it.
Suncorp (SUN) “Below $8 is still my target sell zone” – early days yet, but a bottom might be in. Maybe over $8 is the time to cover?
Westfield (WDC): “about to hit support, but daylight below” – bouncing off support of $9, but likely to be in a trading range from here on.
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.