Technicals | May 17 2016
By Michael Gable
This week is all about interest rates again as we await the RBA minutes today from their meeting two weeks ago. This is on the back of Australian 10 year bond yields reaching their lowest level ever. In other words, the market expects another interest rate cut.
The unemployment rate may well confirm it on Thursday. The Australian dollar has fallen nearly 5% from its peak a few weeks ago which again confirms the overall trend for the dollar to be down, not up. What does it all mean? There are two sides to the coin and after a great run here, the market may take the negative side for the time being. We still expect the market to consolidate the recent rally and the next few weeks will see a lack of follow-through to the upside with the bias being to the downside. With that in mind we are still happy to take some expensive stocks off the table here.
One stock looking a little overbought is Eclipx Group ((ECX)).
ECX has looked more bullish in the last two weeks as it finally cleared resistance near $3.10. It is looking overbought in the short term and is likely to come back a little. We would like to see it hold above $3.10 and if it can do that, then that would represent a better buying opportunity.
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Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)
Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.
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
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Disclaimer
Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). 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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