Santos Shapes For A Rally

This story features SANTOS LIMITED. For more info SHARE ANALYSIS: STO

By Michael Gable 

Price action the last two days conveniently put the ASX200 into positive territory for the March quarter, finishing up about 0.8 per cent, despite a better than expected earnings season in February. Iron ore was up last night by over 4 per cent, which is the largest daily gain since August 2013. It has nearly reversed the entire drop experienced in early March as traders start betting (hoping) for Chinese stimulus to step in due to a swag of disappointing numbers recently. If stimulus doesn’t come, then expect some more short term pain. On that note, the official Chinese PMI numbers come out today.
In today’s report, we have spotted a potential turning point here for Santos ((STO)).
 

Santos

Santos has been trending down since peaking in September last year. It is once again at the bottom of this recent channel so one would expect it to bounce from here. Short term we can see that the stock gapped up yesterday quite nicely, and we have circled where the MACD is about to cross over again. One interesting point however is the divergence on the RSI. So as STO made a new low on 20 March, the RSI was making a higher low. We could therefore be seeing this current downtrend finally ending. It is still too early to call that of course. At the very least we expect STO to rally up towards about $14.30, but if it takes out the previous high at $14.36, then we may be seeing the beginning of a bigger move up to retest last year’s high at $15.80.
 

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
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.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms