Market Matters Report / The Hickman Report - Saturday 18th April 2015

By Market Matters 18 April 15

The Hickman Report - Saturday 18th April 2015

The Hickman Report - Saturday 18th April 2015

Afternoon All,

Equities had a volatile week with the European markets falling on Friday night, as Greece concerns heightened and China tightening rules on margin trading helped send US indices lower. It should not be ignored that margin debt in the US is currently reported around $US465bn, basically at all-time highs, producing plenty of room for forced sellers / a correction and hence the contagion concern’s about Friday’s decision in China.
As readers know, I have been targeting one final push higher in equities prior to a major retracement, the question now is has the correction already commenced? To address this significant issue, I will as usual consider the markets that are “clear to me” and collect the important pieces of our puzzle:

1. The ASX200 short term remains neutral between 5749 and 5997, medium term we will ideally see the 6100 area.
2. The REIT’s remain bullish targeting fresh highs in 2015.
3. Australian 10-year bonds are targeting one final push up for new highs i.e. a final push at lower rates.
4. US Indices look very vulnerable to a 10-15% correction from current levels.
5. The Canadian Composite remains bullish targeting a fresh high in 2015.
6. The German DAX has corrected ~almost 6% already and ideally after another +1.5% fall should continue its bull market to fresh 2015 highs.
7. Asian Indices remain bullish.
8. The resources sector feels like it can continue its recent bounce / correction.
9. The Australian banks feel vulnerable to further weakness BUT seasonally they should start rallying into May dividends.
10. AMP, a stock highly correlated to the ASX200 remains bullish.
11. The insurance sector looks likely set for continued weakness.
12. Australia’s largest supermarkets look positioned for continued weakness.

I am 60% confident of a final push up in equities, unfortunately not the most encouraging number possible.

Summary:

1. I still believe the ASX200 will likely push towards 6100 over coming weeks but I will be selling this strength if it occurs.
2. I am likely to move towards 25-30% cash if the ASX200 rallies towards 6100 with CGF / BOQ likely candidates to be sold into strength.
3. My other 3 stocks IIN, MGR and VOC are not strongly correlated to the index and hence I am likely to hold.
4. I continue to have no interest investing the mining sector.

My cash holding is ~20% (swelled by options and recent dividends) but could be interpreted to be higher if we consider that IIN is in a takeover situation.

*Watch for alerts next week.

1. For traders – (a) Watch FMG price action very carefully next week, I remain in damage control.

What Matters this week

The ASX200 looks likely to open up around 40 points lower on Monday. 


 

Potential Investing opportunities for the coming week

I remain a seller of equities around 6100 but short term I am not buyer of this current weakness.

Potential Trading for the coming week

• Ideally I will be looking to exit Fortescue (FMG) calls early next week. The stock keeps trying to rally for the 180 area.
• Nothing else clear at present.


 

Portfolio Holdings

My portfolio underperformed with the market where the ASX200 lost 1.5%.

1. Bank of Queensland (BOQ) -4.6% - medium term investment – note BOQ went ex-dividend yesterday.
2. Challenger (CGF) -3.3% - medium term investment.
3. iiNet (IIN) -2.5% situation stock.
4. Mirvac (MGR) -2.2% - medium term investment.
5. Vocus (VOC) -1.2% - Medium term investment.

• Cash for future purchases, ~20%.

NB I do not mention “trades” in this section as I only risk 1-2% generally in my trades.


Australian ASX200

I continue to look to spread my portfolio into more growth stocks in coming weeks and cash.

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 – Australian 10-year Bonds weekly Chart

Chart 7b – The US 10-year Interest Rate Monthly Chart

 

American Equities

The American indices continue to show signs of topping out for 2015 and a final blow-off is starting to feel less likely by the week.

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 Weekly Chart

Chart 14 – The Canadian Composite Monthly Chart

 

European Indices

European Indices still look set to rally another 2-3% aided by ECB stimulus ideally reversing likely early losses on Monday.

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 very bullish as it opens its market to offshore investors and Japan is 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 that are now looking good. Overall I am now 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) Weekly 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 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.




Commodities

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 remains negative but I believe we now see a strong rebound towards $US58 barrel.

Iron Ore is 50-50 here BUT the trend is clearly down.

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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