CSL To Resume Uptrend

This story features CSL LIMITED. For more info SHARE ANALYSIS: CSL

By Michael Gable 

The ASX 200 last week managed to rise 149 points within 3 days. Positive PMI data from China and a bounce in iron ore prices sent resources stocks higher, including BHP Billiton (BHP) that we tipped here a few weeks ago, and the rest of the market was happy to follow. Taking the approach of buying into “defensive” stocks has not stopped us from profiting from this rally, with great performances in some of our recent picks such as Woolworths (WOW), Wesfarmers (WES), Brambles (BXB), and Telstra Corporation (TLS). Other recent picks such as Flight Centre (FLT) and Magellan Financial (MFG) appear to be stretching their legs now and have higher to go. We have spotted another buying opportunity, with CSL ((CSL)) looking likely to rally from current levels.
 

After peaking in March this year, CSL has now completed a 3-wave correction against the uptrend. At its recent low last week, we can see not only a crossing on the MACD (circled), but also some divergence on the Relative Strength Index (RSI). This divergence is indicated by the diagonal solid lines. This is where the price has gone to a new low but the RSI is already trending higher. As a result, we expect CSL to trade higher from here during the next several weeks. It should head towards the $72 region, which is about where the valuation is for CSL. Therefore this price offers an opportunity to buy into CSL, or if you are looking for an exit strategy, it pays to be patient here and wait for higher levels.

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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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