Market Matters Report / The Hickman Report - Saturday 13th December 2014

By Market Matters 13 December 14

The Hickman Report - Saturday 13th December 2014

The Hickman Report - Saturday 13th December 2014

Overall Market Matters macro view

My tree is up, most presents are bought but not under the tree yet as 4 year olds lack patience, basically Christmas is arriving fast in everything except equities! Last night equities were again hammered as oil continues its relentless slide, more like a free falling piano as opposed to a knife. The Dow had its worst week since 2011 and as you know I am targeting a 2000-2500 point pullback in the Dow, just like 2011. Crude oil has now fallen an amazing -25% in just three weeks and -46% in seven months, interestingly it is this extreme panic that I can see creating a relief rally and hence a potential Christmas rally / bounce e.g. I am still targeting a 7% rally in heavyweight oil stock Woodside (WPL).

This week’s report is shorter than usual as it all comes down to this simple sentence - We have to focus long and hard for the coming few weeks as the “seasonals” are extremely bullish BUT I am very negative equities over coming months:

• In 2014 the ASX200 rallied 355 points (7.1%) in only 13 trading days from Thursday the 12th December.
• Since 1928, following a record closing high in December (which we had), the S&P 500 Index was higher 20-days later on 12 from 15 occasions providing an average gain of 1.48% - www.probabilitytrader.com

Being from a mathematical background I find it extremely hard to invest / trade against the extremely strong seasonal factors that are occurring now BUT I am obviously scared that ideal selling levels will not be achieved if no “Christmas Rally” materialises.

This week there are few clear current technical charts but the quality is again good:

Bullish: The Chinese Index looks set for more gains, Gold and its respective Sector still looks bullish, Seek remains bullish targeting $19 and I remain trading buyer of Woodside (WPL) around $33.50.

Neutral: The ASX200 short term.

Bearish: The US and European Indices are heading for a major correction in coming months, The Australian dollar is headed towards 80c minimum. I remain bearish Woolworth’s long term targeting under $25, I remain bearish BHP longer term, and Macquarie Group (MQG) is targeting $55 area,

My conclusions:

Equities either have or are in the process of making a significant top in December / early 2015.
• Only the seasonals are preventing me establishing large negative positions as I continue to respect significant positive December statistics.
• I am NOT a buyer of any equities at present except gold stocks.
Gold should continue to rally towards $1400 and stocks in the sector, especially Australian based companies should follow with the added tailwind of a weak $A.


What Matters this week

The ASX200 is looking to open down 70 points on Monday, around 5250.


Potential Investing opportunities for the coming week

I remain “drip feed” seller of local stocks into any strength if a Christmas rally rises from the ashes like a phoenix.
• For investors holding cash, be patient.

Potential Trading for the coming week

I am still a buyer of Woodside (WPL) around the $33 -33.50 area for a 7-8% counter trend rally via January options.

 


Watch for specific ideas in morning reports and Alerts when I transact and stocks hit our levels.


Portfolio Holdings

My portfolio had a good week outperforming the ASX200 which fell 2.2% as we continue to benefit from no resource exposure. Challenger remains my main concern after recent Department of Social Services announcement of changes to Care Annuity, hence downgrading the stock by 4% - I will look to exit into any strength.

1. Bank of Queensland (BOQ) -4.7% - Medium term investment.
2. Challenger (CGF) -3.9% - Medium term investment.
3. Commonwealth Bank (CBA) +0.1% - Long term investment.
4. Regis Resources (RRL) +7.8% - short term trade / investment.
• Cash, around ~15%.


Australian ASX200

I am 50-50 just here as mentioned above.

Chart 1 – ASX200 Monthly Chart

Chart 2 – ASX200 Weekly Chart

Chart 3 – ASX200 Daily Chart

Chart 4 – SPI (Share Price Index) Futures 60 mins Chart

Chart 5 – Volatility Index VIX Weekly Chart

Chart 6 – The US 10 year Interest Rate Monthly Chart

Chart 7 – New Zealand 50 Index Monthly Chart


American Equities

The American indices are approaching my targets fast with the Dow and S&P500 only approx. 2% away.

Chart 8 – Dow Jones Index Monthly Chart

Chart 9 – Dow Jones Index Daily Chart

Chart 10 – S&P500 Monthly Chart

Chart 11 – S&P500 Weekly Chart

Chart 12 – Russell 2000 Index Monthly Chart

Chart 13 – NASDAQ Weekly Chart

Chart 14 – The Stock Market Cycles

 

European Indices

I am still bullish targeting fresh 2014 highs.

Chart 15 – Euro Stoxx 50 Weekly Chart

Chart 16 – FTSE Weekly Chart

Chart 17 – Spanish IBEX Monthly Chart

Chart 18 – German DAX Monthly Chart

Chart 19 – German DAX Daily Chart

 

Asian Indices

Asian indices are neutral at present. However, China is starting to look very bullish as it opens its market to offshore investors.

Chart 20 – Hang Seng Weekly Chart

Chart 21 – China Shanghai Composite Monthly Chart

Chart 22 – Japanese Nikkei 225 Monthly Chart

 

Australian Stocks

I am happy with our portfolio above, except Challenger, and still anticipate selling all / part in coming weeks.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – Oil Search (OSH) Weekly Chart

Chart 25 – Woodside (WPL) Monthly Chart

Chart 26 – RIO Tinto (RIO) Weekly Chart

Chart 27 – Fortescue Metals (FMG) Monthly Chart

Chart 28 – Vale (US) Weekly Chart

Chart 29 – Newcrest Mining (NCM) Monthly Chart

Chart 30 – Regis Resources (RRL) Weekly Chart

Chart 31 – Barrick Gold Corp. (US) Monthly Chart

Chart 32 – CBA Quarterly Chart

Chart 33 – ANZ Bank (ANZ) Monthly Chart

Chart 34 – Westpac Bank (WBC) Weekly Chart

Chart 35 – National Bank (NAB) Weekly Chart

Chart 36 – Macquarie Bank (MQG) Weekly Chart 

Chart 37 – Bank of Queensland (BOQ) Weekly Chart

Chart 38 – AMP Weekly Chart

Chart 39 – Challenger Financial (CGF) Monthly Chart

Chart 40 – Suncorp Group (SUN) Monthly Chart

Chart 41 – Insurance Australia (IAG) Monthly Chart

Chart 42 – QBE Insurance Monthly Chart

Chart 43 – Wesfarmers Ltd (WES) Weekly Chart

Chart 44 – Woolworths Ltd (WOW) Quarterely Chart

Chart 45 – Seek Ltd (SEK) Weekly Chart

Chart 46 – Telstra (TLS) Monthly Chart

Chart 47– M2 Group Ltd (MTU) Monthly Chart

Chart 48 – Crown Resorts Ltd (CWN) Monthly Chart

Chart 49– Ansell Ltd (ANN) Monthly Chart

Chart 50– CSL Ltd (CSL) Monthly Chart

Chart 51 Ramsay Healthcare (RHC) Monthly Chart

Chart 52– Resmed (RMD) Weekly Chart

Chart 53 - Fairfax Media (FXJ) Monthly Chart

Chart 54 - Flight Centre (FLT) Monthly

Chart 55 – Coca-Cola Amatil (CCL) Weekly

Chart 56– Myer Holdings (MYR) Weekly

Chart 57– JB Hifi (JBH) Monthly

Chart 58– Harvey Norman (HVN) Monthly

Chart 59– Australian Dollar (AUD) Weekly Chart

The $A looks to be heading back towards the 81c area minimum.



Commodities

Gold fell on Friday after US unemployment data confirmed strong economy sending the $US soaring. Overall I remain positive while the precious metal can hold near $US1200/oz.

Copper remains very negative on a longer term basis, a very similar chart pattern to Newcrest Mining (NCM) and unfortunately we all saw what happened there.

Crude Oil remains negative at present but a bounce / consolidation is due.

Iron Ore is showing no signs of a bottom but interestingly some short covering is emerging in the stocks.

Chart 60 – Gold Monthly Chart

Chart 61 – Gold (in $A) Quarterly Chart

Chart 62 – Copper Weekly Chart

Chart 63 – Crude Oil Monthly Chart

Chart 64 – Iron Ore Monthly Chart


Please note this is my personal TECHNICAL opinion of markets and "General Advice" taking no account of individual’s circumstances.


Have a great week,

Shawn Hickman
marketmatters.com.au

 

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The author holds an interest in the financial products of BOQ, CBA, CGF, KDL, NCM, RRL &WPL.