Market Matters Report / The Hickman Report - Saturday 16th November 2013

By Market Matters 16 November 13

The Hickman Report - Saturday 16th November 2013

Last week was overall extremely quiet for the ASX200 closing up just one point, but we had very volatile days with Wednesday dropping approximately 80 points intraday and on Thursday / Friday we reversed all the fall. Conversely the Dow added another 200 points, again to all-time highs, fuelled by very positive comments from Janet Yellen.

Hi All,


What Mattered Last Week


Last week was overall extremely quiet for the ASX200 closing up just one point, but we had very volatile days with Wednesday dropping approximately 80 points intraday and on Thursday / Friday we reversed all the fall. Conversely the Dow added another 200 points, again to all-time highs, fuelled by very positive comments from Janet Yellen.


  • Janet Yellen, nominated to be the next chairman of the Federal Reserve said the central bank should take care not to withdraw stimulus (quantitative easing) too early from an economy that is operating well below potential.
  • Janet Yellen also helped the market by adding “she sees no evidence of an asset-price bubble in the stock market”.
  • This is clearly in part a liquidity fuelled rally which was significantly aided last week by the above comments short term.
  • Strong earnings reports / guidance from BSL, JHX, IPL, MYR and ORI were standout positives for the ASX200.
  • Conversely both OZL and PNA were weak following a concerning trend in copper prices.
  • FMG and QBE appeared to receive large natural buying in the market leading to strong outperformance for the week.


What Matters This Week


  • I believe after Janet Yellen’s comments last week the ASX200 will be driven by strong seasonality and specific stock news.
  • In mid-December shareholders will receive $8.6 billion in dividends, explaining why the ASX200 has rallied 85% of time from this period into January.
  • However, some of this will likely be absorbed by the large number of floats hitting the market into 2014.
  • I believe it’s time to start laying plans for the banks into 2014 especially with my view that the next move in rates will be up.
  • With dividend yields growing at close to 9% p.a. over recent years and capital gains, a major issue retail investors are unlikely sellers.
  • Personally I feel the banks will represent excellent medium term selling if / when they make fresh highs for 2013.
  • This selling opportunity could well be around 5600, for the ASX200, in early January.
  • Due to capital gains issues option strategies may suit some investors.
  • November began historically the best 3 months for the US markets.
  • The 6 month period has averaged a gain of 7.1% since 1950.


Trading for the coming Week


  • Overall the ASX200 remains clearly bullish and I believe will make new highs for 2013 next week.
  • Monday is going to be very interesting, sheer momentum may drive us up towards the 5500 area sooner rather than later.
  • I remain a net buyer of the market while we remain over 5300 for the ASX200.
  • I am looking to increase long exposure to QBE any buying close to $15 is good risk reward.
  • I am a buyer of FMG around $5-5.20 but this is unlikely to occur this week.
  • I am looking to increase holdings of OGC into sector weakness – copper is a slight concern here.
  • The gold sector has had an awful year and a short covering rally into Christmas is strong possibility, best to be early.


Market Matters’ View


The below views are illustrated in detail by the charts beneath.

Bullish: Australian Banks (w), ASX200 (d), BEN (m), BOQ (w), CBA (m), CSL (m), Dow (m), FOX (m), FMG (w),FTSE (w), Hang Seng (w), IBEX (m), MQG (w), NASDAQ (m), Nikkei (m), OGC (m), QBE (m), S&P (m), SUN (m), WES (w) & WOW (m).

Neutral: AMP (w), BHP (w), NZ (w), RIO (w), SEK (w), STOXX (w).

Bearish: China (m), Copper (m), Gold (m), NCM (m).

Time Frames - (d) = daily, (w) = weekly and (m) = monthly.

e.g. A (d) implies I am bullish on a daily basis but a (m) would mean I am bearish on a monthly / longer term basis.


Australian ASX200


I remain bullish on a monthly basis, plus we are in a seasonal very bullish phase. Most people were too afraid to buy closer to 5000 because of media coverage surrounding the US debt default situation – now fear of missing out is emerging, and 5600 is quickly coming into view. Currently every retracement soon reaches hungry buyers. The yearly range targets 5450+ and a simple monthly abc targets 5670.



 

 

 

 

 

 

 

 

 

 

 

 

American Equities


The American indices look set to rally into December with the Dow targeting over 16,000.















European Indices

 

The European indices now look net bullish for 2013 with the FTSE starting to look very promising, I would be an aggressive buyer with a stop under 6275. The Spanish IBEX has reached my long term target plus the short term pattern targets a 10% rally minimum. 









Asian Indices

 

Asian indices remain positive but have been underperforming. The Nikkei has been trading out of control, under the weight of stimulus and intervention.









Australian Stocks



Buying sustainable yield and selling XJO calls has been a logical strategy over recent years, however, the risk of rising bond yields has resulted in me now recommending a more balanced portfolio – my view is that the next move in rates is up. Overall the major stock’s in the ASX200 remain clearly positive and I remain a net buyer targeting 5500 / 5600 area.

 

Stock picking remains at a premium as is demonstrated by BOQ outperforming in the Banks and FMG in the resources space.















































Australian Dollar


The $A is looking very heavy, the recent bounce was a little greater than anticipated breaking 97c, renewed weakness now looks likely with an ultimate target of 81-82c.





Commodities


The Gold chart looks bullish longer term targeting fresh recent highs, likely over $2,000 suggesting inflation - confirmation requires a close over 1480. On a monthly basis, gold and respective stocks remain bearish targeting new lows for 2013/14.

Also, the amount of money tied up in Gold ETF’s that did not exist pre 2004 remains. Having recently visited China, the only two investments that interest locals are property and gold...not reflected by the price yet.

Copper remains negative on a longer term basis, a very similar chart pattern to Newcrest Mining and we all saw what happened there – PNA & OZL had poor weeks.






 

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
Level 15, 60 Castlereagh Street
Sydney NSW 2000

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Website: http://www.shawstock.com.au


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