article 3 months old

Goodman Heading Lower

Technicals | Oct 06 2016

This story features GOODMAN GROUP. For more info SHARE ANALYSIS: GMG

Bottom Line 05/10/16

Daily Trend: Neutral
WeeklyTrend: Down
Monthly Trend: Up
Support Levels: $6.84 – $6.65 / $6.38
Resistance Levels: $7.35 – $7.44 /  $14.50

Technical Discussion

Goodman Group ((GMG)) is an Australia based integrated commercial and industrial property group. The Company is engaged in investing in industrial property, fund management, property services and property development, including development management. It owns, develops and manages real estate, including warehouses, logistics facilities, industrial estates, business parks and offices globally. It also offers property solutions for various industries, such as logistics, pharmaceutical, automotive, e-retail and retail. For the year ending the 30th of June 2016 revenues increased 45% to A$1.71B. Net income increased 6% to A$1.27B. Net income was partially offset by net gain from fair value adjustments on decrease of 36% to A$327.8M (income) and Interest expense from third party loans. Broker consensus is “Hold”. The dividend yield is 3.3%.
 
Reasons to be bullish (caution short-term):
→ It’s been a strong start to the year for FY17 providing some certainty in regard to earnings
→ Under geared balance sheet presents opportunity.
→ Benefitting from the structural shift to e-commerce by consumers & retailers
→ A strong balance sheet offers scope to choose inexpensive developments
→ Geographical diversity
→ Earnings and distribution growth remains
 
It’s been a solid trend higher since 2009 for GMG with price tending to spurt higher before embarking on long drawn-out consolidation phases. Not that there is anything wrong with this type of price action but patience is definitely required with this stock. However, recovery highs have continued to be exceeded and longer term there’s no reason why this trait can’t continue. However, it now appears that a deeper retracement needs to unfold before the prior uptrend reignites. The reason being, that the movement down off the late August high has been impulsive in nature which should not complete the whole corrective pattern. The recent pivot high also terminated in the typical retracement zone as annotated with the leg higher also unfolding in 3-waves meaning the pattern is likely corrective.
 
Volume often provides a clue and it’s very evident here that it increased significantly during the prior leg down whilst declining substantially during the recent rally. Again this adds weight to the case for lower prices over the coming weeks. The wave equality projection is down at $6.38 which interestingly enough sits at the exact same level as the 61.8% retracement zone of the whole movement higher that commenced in September 2015. This provides an area of confluence and increases the chances that it’s going to be significant. Bigger picture, a larger corrective pattern down to that aforementioned level would be deemed as being extremely bullish and provide a buying opportunity.
 

Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).

Risk Disclosure Statement

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For more info SHARE ANALYSIS: GMG - GOODMAN GROUP

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