Coke Had Its Run?

By Michael Gable 

The main news items to start this week once again revolve around interest rates. Interest rates in the US should remain where they are for a little longer than expected after the non-farm payroll numbers missed by a long way. They came in at 126,000 compared to market estimates of 250,000. Even if we take into account the bad winter, it was still a poor number. The Fed will therefore be slightly less likely to raise rates when economic data such as that is looking weak. Here in Australia, we have an RBA rate decision today. According to the futures markets, a rate cut today is almost a sure thing, with a cut at least by the May meeting being a near certainty. Given the “pricing in” of a rate cut, we do not expect the markets to lift on a sustained basis and still maintain our “short term bearish, long term bullish” bias on the overall market.

Today we take a look at Coca-Cola Amatil ((CCL)).
 

CCL has recently moved higher with the rest of the market, but it has now come close to that key $11 zone which is where it was trading at last year before dropping 15% in one day. So after 12 months, it has finally recovered in price but the question is whether the fundamentals support that. Purely from a charting point of view, we can see that this area will hold some resistance for the stock. Shorter term it may flash above $11, but already on this weekly chart we can see some indecision across the last couple of weeks. You will also notice a sell signal on the weekly RSI. The last time this occurred was two years ago when CCL was peaking above $15 (both have been circled). Whether the stock has found a high at the moment or will quickly stick its head above $11, it appears as though at some stage it will be trading back to the mid $9’s again.
 

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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