Trend Up For Echo

This story features MCMILLAN SHAKESPEARE LIMITED. For more info SHARE ANALYSIS: MMS

By Michael Gable 

The Australian market recorded 12 straight days of gains, the longest winning streak since 1986. Naturally, you would expect the next 12 days to be less spectacular. Particularly pleasing was the rally in the banks, especially after confirmation of that interest rate cut that we have been expecting. There should be another rate cut on the way also.

Given the gravity-defying move in the market here, the probability of a short-term move down is very high and therefore provides opportunities for shorting the market, or hedging stocks that have rallied hard through the use of strategies such as covered call writing. Having said that, a couple of companies that we like: McMillan Shakespeare ((MMS)) and Veda Group ((VED)); appear to be breaking out to higher levels. We review Echo Entertainment Group ((EGP)) after some pleasing half year results.
 

For the last year EGP has been trending very strongly. The only negative we can see on this weekly chart is some divergence between the price and momentum (as measured by the RSI and indicated by the solid blue lines on the chart). Because of this, there may be a shorter term correction, but as long as it respects the uptrend (by staying above the green line), then any dips can be bought.
 

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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

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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