Banks Reaching Support

This story features NATIONAL AUSTRALIA BANK LIMITED, and other companies. For more info SHARE ANALYSIS: NAB

By Michael Gable 

Our cautiousness remains warranted as the market continues to ease back. Our first downside target has been hit however, so we have an updated chart of the S&P/ASX 200 Index in our charting section. Whilst resources and energy stocks are very “cheap” here, the more conservative plays will continue to be stocks with some US dollar earnings and stocks that will benefit from lower interest rates.

As a result, we have updated the chart for National Australia Bank ((NAB)). The banks are likely to find renewed support due to their very high yield in comparison to the cash rate.

 

NAB is not our preferred bank, but it is at an attractive level now, as are ANZ Bank ((ANZ)) and Westpac ((WBC)). We can see on this weekly chart here that the stock is at the bottom of its recent range. Since peaking 13 months ago, the stock has drifted back to form a flag formation. It is taking a breather before a continuation of the overall uptrend. With interest rates likely to head south again, and investors taking on a more defensive attitude, NAB and the rest of the banks will start to see some buying again. Next year’s forecast yield, grossed up to include franking, sits at ~9%. Now that NAB is at the bottom of the recent range, we expect a move up towards resistance in the mid $34’s. A breach of that will see NAB push beyond last year’s high.

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.

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