Sold Off PLS Shares Ready To Rally

This story features PLS GROUP LIMITED.
For more info SHARE ANALYSIS: PLS
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Michael Gable of Fairmont Equities reports PLS is showing signs of a potential rebound following a sharp sell-off.

By Michael Gable

Today, we have an expected interest rate increase from the RBA and tonight are the US mid-term elections.

With US tech stocks looking a bit shaky in this past week, the rest of the market has found it hard to gain any traction, but we still believe that we are at the sort of levels where the rest of the market is going to improve, especially when the US election is out of the way.

US bond yields continue to fall, along with the US dollar and this will be a nice tailwind for stocks and commodities in general, we just need sentiment to shift from being extremely pessimistic to have its “a-ha” moment, where cheap sectors with a strong outlook like resources will quickly gain buying support.

We still see big US tech as looking a bit heavy here, but we expect a broadening out into other sectors of the market, which is why the Russell2000 (the US small cap index) looks good here.

Money will go somewhere and we still believe that funds will rotate out of tech and into other areas of the market.

Some of the recent drops in areas such as precious metals look to be the result of forced liquidations, which is similar to what we saw at the lows in July where falling tech stocks put larger funds under pressure to raise cash any which way they can.

So, once again, we believe we are very much at the lows here and a recovery through to Christmas and beyond is the most likely path for markets.

Today, we offer a technical view on PLS Group ((PLS))

PLS has fallen particularly hard in the past couple of months, but we are seeing signs that it should bounce from here.

It has been trading in a heavily oversold position on the RSI and it moved out of that last week.

Yesterday, it then made a slightly new low, while the RSI didn’t make a new low.

This divergence between price and the RSI is a positive sign and it indicates that we should see a bounce from here.

PLS is therefore a buy here and we expect a bounce towards a resistance zone near $3.65 – $4.00 before we reassess.

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.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms