Codan Shares Ready To Rally

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This story features CODAN LIMITED.
For more info SHARE ANALYSIS: CDA
The company is included in ASX200, ASX300, ALL-ORDS and ALL-TECH

Fairmont Capital's Michael Gable suggests Codan shares are poised for further gains as strong uptrend and consolidation equal breakout potential.

By Michael Gable 

The US Federal Reserve kept interest rates on hold last week, but the initial reaction from markets was that rates are probably heading higher from here, not lower.

The resulting share market sell-off was quickly erased a day later.

The US president has stated on several occasions that they plan to grow their way out of debt, and levels are so high that the new US Fed chairman will probably come to the same conclusion as his predecessors and keep rates lower for longer.

The other wildcard is the oil price. Higher oil prices later this year could tilt the narrative back towards rate cuts and that will once again be a positive for markets.

It will also be a massive positive for hard assets which provide the perfect hedge to high inflation and falling interest rates.

Although it is expected that the war in Iran is over and the market will be flooded with cheap oil again, the risk firmly remains to the upside for prices.

President Trump said the quiet bit out loud last week when he stated off the cuff that “we run out of reserves in about four weeks, we would really run out, and there’ll be a time when you wouldn’t be able to get it”.

We also see that oil short positions are now the highest on record as traders dump oil contracts. We believe the market has well and truly priced in the good news, and then some, and the risk from here is very one sided.

It won’t take much to get the oil price climbing again (I’m sure the Iranians are well aware of this), and then the massively disproportionate trade of “short oil” will be scrambling to cover.

Our view on oil remains the same — stay long, be patient, and wait for the spark to ignite.

Today, we offer a technical view on Codan ((CDA))

Codan has been trending well for over 12 months now.

Price action since the start of the year has looked particularly positive, as it rallies very hard and then follows that up with a healthy consolidation.

Currently, it is consolidating alongside the May high and this is a bullish sign that it is getting ready for another rally higher.

Codan is a buy here and initial stops can be considered back near $38.

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)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services. 

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

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). 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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