Technicals | Jul 21 2015
By Michael Gable
Last week we suggested that the market was “waving us through now”. Since then, the S&P/ASX 200 Index has finished higher every day, adding 213 points or nearly 4 per cent. Companies will start reporting results in a few weeks from now and we expect the market to head higher into that period. What will then be interesting is to see which companies “run hard” into their results, and which ones do the opposite. This means that some companies could be worth buying or selling as we assess the expectations of the market compared to what the companies can reasonably report. An example of a company having been sold off heavily is Greencross ((GXL)) which is one of the stocks covered in this week’s report. It may we be an opportunity where the chances of a decent result could see it rally back to more reasonable levels.
When we looked at GXL on 7 April, it was trading at $7.70 and we suggested that it could head lower, with support at $7 and then further down at $6. It has clearly gone even lower than that, but the bounce from around $5 is quite robust, in our opinion. We have seen a strong week of buying here and the stock has triggered a buy signal on the weekly RSI (pictured). The stock has not broken the downtrend that commenced a year ago, but it is showing enough reversal signs here that some investors may wish to test the waters. There is some slight resistance at current levels, but beyond that we could see it head to over $7 before finding the next level of resistance. Buyers at current levels should place stops under last week’s low.
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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
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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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