Market Matters Report / The Hickman Report - Saturday 14th February 2015

By Market Matters 14 February 15

The Hickman Report - Saturday 14th February 2015

The Hickman Report - Saturday 14th February 2015

Afternoon All,

Friday was the start of the Chinese New Year and what a day we had!

Last week was fascinating as the market experienced 4 consecutive down days that were eclipsed on Friday by one of the strongest days I have ever experienced for the Australian share market; the result was a weekly gain of 0.92% and the ASX200 closing at levels not seen since May 2008. As I said last week don’t scramble to take profit yet, I believe there is likely to be a little more to come. On Friday we saw fresh all-time highs from both Westpac and ANZ banks, I believe they will consolidate over the coming 2-3 weeks prior to rallying again.

We are currently experiencing a “feeding frenzy” of investors chasing yield from the stock market as interest rates tumble. The Australian 3 year bonds have been an accurate indicator of RBA moves ahead, while trading at 1.85% they are currently predicting 2 more rate cuts in Australia. The front page of today’s Financial Review (online) is focused on the chase for yield for investors, and how best to achieve your goals, perhaps the start of a bubble! Currently the statistics are showing us that there are 5 unemployed people for every job so at least one more rate cut appears likely. However markets look ahead, see recent oil example below, hence do not be surprised if I start taking some strategic profits on my core long bank positions in coming months.

· Crude Oil recently bottomed at $US43.58/ barrel on the 29th January BUT Australian oil stocks mostly bottomed weeks beforehand and have since rallied over 10%.


The resources sector also had a stellar run last week but some fundamentals still have we wary at investing in this sector, I feel cashed up investors are simply buying what feels cheap as opposed to predicting a pick-up in China and commodity prices:

· Since mid-January the Iron Ore price in $A terms has fallen over 4% BUT BHP/FMG/RIO have rallied almost 19%.

· Oil stocks still look awful to me and I believe are factoring in a $US20 rally in the oil price = a dangerous game.


This week the clear technical charts remain aligned with above comments:

Bullish: The ASX200 while over 5595, European Indices (especially Spain), Chinese Index, Banks, FMG short term target $2.90, Banks, REIT’s.

Neutral: RIO, FTSE, Hang Seng, Nikkei, Newcrest (NCM), Regis (RRL).

Bearish: Copper, Crude Oil, Iron Ore, BHP, Coca-Cola and Flight Centre – longer term.

My conclusions:

Overall boring with no change:

· Telstra (TLS) and the Banks will continue perform well in coming weeks but consolidation is due.

· My favourite sector to buy at current levels is the REIT’s – Westfield (WFD), Goodman (GMG), Stockland Group (SGP) and GPT.

· Watch bond markets carefully for any move away from “cheap money”.

· I still have no interest in the commodity space for investing.


What Matters this week

The ASX200 is looking to open 25 points higher on Monday after the Dow rallied 47 points on Friday night.


Potential Investing opportunities for the coming week

· I remain long the yield play.

· Short term I prefer TLS and CBA to cash for February dividends and NAB and other banks for future dividends in May.


Potential Trading for the coming week

· I am a short term seller of the ASX200 over 5900 targeting 5775 area prior to again becoming a buyer. Only ½ volume as trend is currently strong.

· I like the REIT’s at current levels.



Portfolio Holdings

My portfolio underperformed last week due to the lack of resource stocks, the ASX200 rose 0.9%. We realised a great profit in BOQ but unfortunately gave some back to the market in Suncorp (SUN).


1. Commonwealth Bank (CBA) +0.2% - Long term investment.

2. National Australia Bank (NAB) +0.8% - Medium term investment.

3. Telstra Corporation (TLS) unch. - Medium term investment.


Cash for future purchases, ~10%.

Australian ASX200

I am looking to potentially switch CBA after they go ex-dividend and take profits on my banks likely over 6000 for the ASX200.

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 ASX200 REIT Index Monthly Chart

Chart 6 Volatility Index VIX Weekly Chart

Chart 7 – The US 10 year Interest Rate Monthly Chart


American Equities

The American indices are now 50-50 here after holding support levels.

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

European Indices look set to rally another 6-8% on ECB stimulus..

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 remains 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

Quality stocks with sustainable yield remain standouts.

Chart 23 – BHP (US) Monthly Chart


Chart 24 – BHP Daily Chart

Chart 25 – Woodside (WPL) Daily Chart

Chart 26 – RIO Tinto (RIO) Weekly Chart

Chart 27 – Fortescue Metals (FMG) Weekly 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 32b – CBA Daily Chart

Chart 33 – ANZ Bank (ANZ) Monthly Chart

Chart 34 – Westpac Bank (WBC) Weekly Chart

Chart 34b – Westpac Bank (WBC) Daily 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) Quarterly Chart

Chart 45 – Seek Ltd (SEK) Weekly Chart

Chart 46 – Telstra (TLS) Monthly Chart

Chart 47– M2 Group Ltd (MTU) Monthly Chart

Chart 48 – Vocus Communications (VOC) Weekly Chart

Chart 49– Stockland (SGP) 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 continues to decline with ultimate technical targets now well under 70c.



Commodities

I remain bullish Gold targeting the $US1400 area but stocks have reached my target area so I am now neutral.

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 I believe is now underway.

Iron Ore has potentially commenced another leg to the downside.

Chart 60 – Gold Monthly Chart


Chart 61 – Copper Monthly Chart


Chart 62 – Crude Oil Monthly Chart

Chart 63 – 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 Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
The author holds an interest in the financial products of CBA, KDL NAB, and TLS.