Uptrend Resumes For Aristocrat Shares

This story features ARISTOCRAT LEISURE LIMITED.
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Michael Gable from Fairmont Equities suggests the consolidation in Aristocrat Leisure shares is ending, with a new uptrend to resume.

By Michael Gable

The Australian share market had a mildly positive week as US yields and the US dollar generally held steady.

We note that copper and gold have started to edge higher, and some local tech stocks (which are very sensitive to rates) look like they are ready to rebound which could be an indication that the bulk of the “bond yields fear” is subsiding and we are getting ready to head higher again.

The US bond market was closed overnight for a bank holiday so volumes in the equity markets on Friday and Monday were fairly low.

US CPI numbers are out on Wednesday night so that may well be the catalyst to convert a possible bottoming here in stocks into some directional movement instead.

Although the spike higher in yields has caught the market off-guard and is responsible for weakness since the end of August, and an easing back would help stocks rally again, it is likely that they will remain higher for longer.

As we have stated before, although this is a negative for long-duration stocks like tech, we don’t believe that it will hurt commodities as they will be the “hedge” against higher inflation and uncertainty where visible cash flows will be king.

Today, we offer a technical view on Aristocrat Leisure ((ALL))

After bouncing strongly in May, Aristocrat then trended well until peaking in early August.

It then eased back to consolidate that move.

We can now see Aristocrat breaking out of that consolidation (circled).

Aristocrat is therefore a buy at current levels and we expect it to trend higher again.

Although more conservative investors may want to see a daily close above $62 before committing to the stock.

Initial stops can be considered just under $58.

Content included in this article is not by association the view of FNArena (see our disclaimer).

Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney)
• Bachelor of Commerce (University of Sydney)
• Diploma of Mortgage Lending (Finsia)
• Diploma of Financial Services [Financial Planning] (Finsia)
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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