Market Matters Report / The Hickman Report - Saturday 20th December 2014

By Market Matters 20 December 14

The Hickman Report - Saturday 20th December 2014

The Hickman Report - Saturday 20th December 2014

Afternoon All,

This will be my last report for 2014 and hopefully I can have a few quiet days with the family next week. I may well trade / invest from home as I am “Bloomberg” connected hence trading alerts may well still be forthcoming. Have great Christmas and happy New Year!

Overall Market Matters macro view

Christmas is almost upon us and with the exception of the weather, my 4 year old is making it feel very festive and exciting indeed. The markets continue to unfold almost exactly as anticipated, which is extremely exciting. 

Let’s look simply at what I expect comes next:

1. The ASX200 should continue to rally towards 5400 and potentially 5500. The combination of tops being extremely hard to pinpoint and Christmas rallies going further and harder than expected should not be ignored; last year’s Christmas rally was 355 points which equates to 5501 – see chart 3.
2. I will be looking to reduce my equity holdings into this rally and go “trading short” via options. This year the ASX200 fell 331 points (6.1%) in 5 weeks from the second of January.
3. Ideally the US Indices will rally another 2-3% from where I expect a 15% correction back towards the recent October lows – see charts 8-14.
4. I will be an aggressive buyer of stocks if this pullback materialises, anticipating a positive 2015 that will then make fresh all-time highs in the US.

I believe the recent market volatility led by Crude oil is a warning of what we are about to witness, there are certainly numerous economic and political worries on the horizon that can unhinge US equities from these lofty levels.

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

Bullish: The Chinese Index looks set for more gains, Gold and its respective Sector still looks bullish, Seek remains bullish targeting $19.

Neutral: RIO.

Bearish: The US and European Indices are heading for a major correction in coming months, The Australian dollar is headed towards US80.75c 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 are close to reaching a significant top in late December / early 2015.
• I am a seller of equities into this current rally and will be looking to establish trading shorts.
• I am NOT a buyer of any equities at present, except gold stocks on down days.
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 up around 30 points on Monday, around 5370.


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

• Look to short the market ideally on the last day of December well over 5400.


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

Portfolio Holdings

My portfolio had a great week outperforming the ASX200 which rose 2.3% 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) +1.0% - Medium term investment.
2. Challenger (CGF) +5.7% - Medium term investment.
3. Commonwealth Bank (CBA) +2.4% - Long term investment.
4. Regis Resources (RRL) +10.1% - short term trade / investment.
• Cash, around ~19%.

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 will ideally rally another 2-3% prior to a 15% correction.

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 now 50-50 just here.

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 still looking 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 or hedging with options as this Christmas rally unfolds.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – BHP Daily 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 80.75c area minimum.

 

Commodities

Gold closed over $US1220 on Friday even with inflation falling around the world, I remain bullish targeting the $US1400 area..

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 now overdue.

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.
Happy Holidays,

Shawn Hickman
marketmatters.com.au

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