Trading CommBank’s Next Rally

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This story features COMMONWEALTH BANK OF AUSTRALIA.
For more info SHARE ANALYSIS: CBA
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Fairmont Equities' Michael Gable suggests CommBank shares are poised for a short-term rally towards $180.

By Michael Gable 

Interest rates have been the dominant topic in the past week, both here and in the US. Locally, we saw CPI for July come in higher than expected, which makes it almost certain now that the RBA will deliver another interest rate rise before the end of the year.

Poor trading results from a range of retailers show that, on a per capita basis, the consumer is already under pressure, so it remains to be seen if we just get the one hike as an “insurance policy” before we start thinking about cuts at the end of next year.

In the US, commentary from the Federal Reserve chairman on Friday night has slightly increased the odds of a rate hike. It remains 50-50 at this stage, but what they say and what they do are two different things.

Longer-dated bond yields in the US continue to creep higher, and it seems as though it doesn’t matter what the Fed does to short-term yields; longer-term yields are going to want to head higher anyway.

Today, we offer a technical view on CommBank ((CBA)).

When we last looked at CommBank on 7 July, we noted that “a clear break above $165 would be the trigger for a rally towards $185.”

The eventual rally fell slightly short of that before the stock headed lower again.

Price action in the past several days indicates that a short-term low is now in place for CommBank and that it is ready to head higher again towards the top of the range (which is near $180).

We also have a buy signal on the daily RSI.

CommBank is therefore a buy here for the short-medium term.

Longer-term, however, we would need to see the stock break out of this trading range and make a new 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)

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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