AUB Group Shares Poised For Break-Out

This story features AUB GROUP LIMITED. For more info SHARE ANALYSIS: AUB

The Chartist reports shares in AUB Group are readying for an upside break-out.

12/6:
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $27.00 / $24.98
Resistance Levels: $31.96 (all-time high)

Calendar Events:
Report Date: August 2024   Ex-Div Date: T.B.A

Reasons to be bullish:
→ Has agreed to acquire a 40% stake in Momentum Broker Solutions in the UK.
→ The above reiterates the company’s strategy to invest in its UK retail offering.
→ A $200m equity placement at $27.50 has been completed.
→ The above is to fund a transaction and to help support future M&A activity.
→ Posturing for an upside breakout.

This is our first review of AUG Group ((AUB)), so before we get into the patterns, let’s take a look at what the company does. It is an ASX200 listed company and provides broker services and insurance products including AMS technology services, education, analytics and business services.

They operate in over 500 locations throughout New Zealand and Australia. The underwriting division includes specialist underwriters who manage and distribute niche insurance products on behalf of licensed insurers. The pillars are commercial underwriting, strata and speciality.

What’s caught our attention here is the large ascending triangle that started to form in September last year. The big positive is the potency of the prior trend. It commenced well to the left of what’s shown on this chart, yet it’s still visible.

It only took slightly more than a year for the stock to double in price which is always a reason to sit up and take notice. The potency of that trend is the reason we are viewing the lacklustre price action over the past eight months or so in a positive light. It doesn’t look out of place on this chart either from a depth or time perspective.

It’s a simple-looking chart from an Elliott Wave perspective. As usual, it provides clarity which is something we always strive for.

Off the lows made in mid-2022, a 5-wave move should be unfolding. It should also still be in its early stages. From the high of wave-1, an Elliott triangle (also an ascending triangle) has been evolving.

Although the upper boundary hasn’t been overcome, I have added wave-2 to the chart at the recent pivot low. The reason is that the required 5-internal swings are in place, thus completing the pattern.

Wave-(e) didn’t hit the lower trend line but this is perfectly normal. Quite often the final leg lower is truncated, meaning it fails to run to its full potential. Also, impulsive price action has been the main theme off that low which adds weight to the bullish case.

TRADING STRATEGY

With the company sitting at the upper boundary of the triangle, an opportunity has arisen. The strategy is to buy following a break through the upper trend line at $32.00.

Once a breakout transpires, we don’t like to see the apex of the triangle revisited. As such, we’ll place the protective stop just beneath it at $29.50.

Use a trailing stop to manage the position.

https://www.thechartist.com.au

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This report may contain advice that has been prepared by The Chartist Pty Ltd (ABN 40 641 323 051). The Chartist Pty Ltd is a Corporate Authorised Representative (CAR No. 1282007) of Shartru Wealth Management Pty Ltd ABN 46 158 536 871, AFSL 422409. Any advice is considered general advice and has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on this advice you should therefore consider the appropriateness of the advice having regard to your situation and your own objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. If the advice relates to the acquisition, or possible acquisition, of a product (other than a security e.g. a CFD) then the client should obtain the relevant Product Disclosure Document and consider it before making any decision about whether to acquire the product. Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

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