Market Matters Report / The Hickman Report - Saturday 16th May 2015

By Market Matters 16 May 15

The Hickman Report - Saturday 16th May 2015

The Hickman Report - Saturday 16th May 2015

Afternoon All

Last week, the market had a choppy style correction, bouncing 1.7%, aided by the ASX200 putting both the Federal Budget and NAB rights issue behind it. After a relatively boring few trading days, it’s hard to get very excited about any fresh set ups / triggers from the market. The two opinions that I remain committed to are:

1. The ASX200 is medium term negative while it fails to close over 5775 - see chart 3.

2. I believe a 10-15% correction from the US equity market is approaching fast -see charts 8-13.

The “Big Four Banks” have already corrected between 11% and 17% and although three of them have traded ex-dividend, the large driver has been the rally in long term bond yields e.g. rising to 3.1% from 2.215% over recent weeks. I feel that interest rates have bottomed and more bond market / interest rate shocks may be looming in the near future to unsettle equities.
After looking for something of interest for over an hour I am reverting back to “One thing I have learned over the years is to not try and push when there is no clear risk / reward opportunity presenting itself”. The reasoning behind this can be perfectly illustrated by one of Warren Buffett’s most famous sayings:

· Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

Hence, while I remain confident that we have a few negative months approaching, I am likely to have a few quiet days / weeks unless something breaks and creates a good risk / reward investment, or trade.

· I still believe the time is still approaching for some patient shopping.


Update after markets major moves:

1. I will remain patient on purchasing banks, but yield hungry investors may want to consider purchasing a % into fresh recent lows if seen.

2. I continue to have no interest investing in the mining sector.

*Watch for alerts next week.

1. For traders – I will be looking for opportunities to go short over the next few weeks.

What Matters this week

The ASX200 looks likely to open up around 10 points higher on Monday.


Potential Investing opportunities for the coming week

· Hopefully investors are now sitting on a healthy cash position awaiting buying opportunities.

Potential Trading for the coming week

· I could scale short positions into strength with stops over 5775-80 basis the ASX200.

Portfolio Holdings

My portfolio outperformed the market last week where the ASX200 rallied 1.7%.

1. Bank of Queensland (BOQ) +1.15% - medium term investment.

2. Mirvac (MGR) +1.8% - medium term investment.

3. Vocus (VOC) -1.3% - Medium term investment.

Cash for future purchases, ~40%.

Australian ASX200

I continue to look to spread my portfolio into more growth stocks going forward, but importantly patiently.

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 7a – The US 10-year Interest Rate Quarterly Chart

Chart 7b – The German 10-year Interest Rate Quarterly Chart

American Equities

The American indices continue to show signs of topping out for 2015, a final blow-off is starting again look possible.

Chart 8 – Dow Jones Index Monthly Chart

Chart 9 – Dow Jones Index Daily Chart

Chart 10 – S&P500 Monthly Chart

Chart 11 – NYSE Composite Index Monthly Chart

Chart 12 – Russell 2000 Index Monthly Chart

Chart 13 – NASDAQ Monthly Chart

Chart 14 – The Canadian Composite Monthly Chart

European Indices

European Indices still look have the potential to rally another 2-3% aided by 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 bullish at present, led by China as it opens its market to offshore investors, Japan is still receiving great strength from ongoing aggressive QE.

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 have been standouts but some industrial stocks are now looking better. Overall I still remain a net seller of the “yield play” and looking to buy growth stocks BUT not resources.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – BHP Weekly Chart

Chart 25 – Woodside (WPL) Monthly 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 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) Monthly 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 48b – TPG Telecom (TPM) Monthly Chart

Chart 49 – Westfield Corp. (WFD) 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 – Crown (CWN) Monthly

Chart 55 – Coca-Cola Amatil (CCL) Monthly

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 an ultimate technical target now well under 70c.


I am now neutral Gold as rising interest rates could easily derail the recent strength. I have divergence with the stocks looking average but the precious metal looking constructive.

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 has bounced as anticipated; I expect renewed weakness over coming months.

Iron Ore is 50-50 here BUT the trend is clearly down and long term futures remain bearish.

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

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