Woolies To Retest Highs?

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

By Michael Gable 

HSBC released its final PMI figure yesterday, coming in at 50.1 – up from 47.7 in July. The Aussie dollar is therefore holding up fairly well at these levels. This increases the chances of a cut in interest rates. Although the RBA meets today, we most likely have to wait for October or November. But another cut in interest rates is clearly a positive for the share market. Combine that with the potential boost in confidence from a clear victor in the election, and you have the ingredients for some sectors to do very well over the next 12 months.

Another factor befitting the market at the moment is the flow of money out of emerging markets. The fear is that tapering in the US will send up yields, making it harder for these countries to borrow, so investors are jumping to safer havens such as the Australian market. However short term price action on the overall market still reminds me of February – March this year so I am still cautious overall on the market for the short term at least and mindful of a potential pullback to under 5000 again. In today’s report, we have uncovered a few companies that are looking like great value at these levels. And following on from last week’s fantastic short term trade in Qantas, we have discovered a couple more stocks which are about to break out and stage an impressive rally.

Woolworths

 

Until Woolworth's ((WOW)) full year results last week, the share price performance was a little concerning. However, the recent rally on the back
of the results has seen the share price break through the $34.50 resistance level, and the volume has come in strongly as well. At
this rate, we would have to assume that WOW will attempt a retest of the 2013 high, which is at $36.81. What investors need to be
doing is looking out for signs of a sharp sell-off around those areas. Not just a sharp sell-off, but also a sell-off on high volume. If
that were to occur, then we could see WOW head back to the low $30’s. If not, then expect WOW to head to an all time high and
gradually strengthen for at least the next few months.
 

Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

After leaving Macquarie Bank's Securities Group in 2008 after many years of service, Michael has gained a highly regarded reputation in the financial services industry. As a Private Client Adviser with Novus Capital, Michael has become a popular live commentator and analyst for Sky News Business Channel’s “Your Money, Your Call” program. He is also the author of the weekly stock market report “The Dynamic Investor”.

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management.

Michael 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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