Market Matters Report / The Hickman Report - Saturday 21st March 2015

By Market Matters 21 March 15

The Hickman Report - Saturday 21st March 2015

The Hickman Report - Saturday 21st March 2015

Afternoon All,

The ASX200 had a great week, rallying 2.7% and an impressive 3.8% from its low on Monday. I have deliberately kept this weekend’s report short because the markets are unfolding exactly as we have anticipated and hence I want readers to understand my thoughts clearly, and likely actions, over coming weeks.

Firstly, let’s let look at the Australian market:

I remain bullish, targeting the 6100-6200 area (~2-3% higher) with a likely break to fresh multi-year highs next week.
• I believe the banks will now step aside from doing all the heavy lifting and let the underperformers play a little catch up, primarily the resources sector – we saw signs of this last Friday, with some of the banks feeling tired.
• Remember, I have been stating the banks gain on average 5.7% in March / April, BUT we are already up 4.4%.
• This coming Thursday is March equity options expiry that is likely to push the top performing banks higher as the “shorts” have to cover and realise some serious pain.
• I have good short term buy signals from oil stocks, the REIT’s and Fortescue (FMG), but banks have hit my targets.
• Interest rates for March 2016 are now at 1.94% as the market starts to look beyond the next rate cut. I get a little concerned when everybody has the same view but currently it does look correct.

Secondly, let’s look at Europe and the US Indices.

On balance, the US Indices look set to break around 4% higher led by the Russell 2000, BUT I am then targeting a 15-20% correction.
• Europe remains strong, aided by massive stimulus, but like our banks they are starting to reach my targets.

Bullish: The ASX200 while over 5875 (daily), Challenger (CGF), Crown (CWN), European Indices (especially Spain), Chinese Index, Healthcare sector, Macquarie (MQG), Nikkei, US equities (short term), REIT’s.

Neutral: ASX200 (monthly), Banks (medium term), Crude Oil, RIO, FTSE and Hang Seng.

Bearish: Copper, IAG, Iron Ore, BHP (long term), Newcrest (NCM), Seek (SEK) short term, Regis (RRL) and Woolworths (long term).

Summary:

• No significant change in my view but the markets advance significantly affects what I am looking to do next:

1. I will not be a buyer of any equities now.
2. Sell part of my overweight (ex div.) CBA, plus other stocks into any strong gains.
3. Continue to look to switch out the “yield play”, into growth stocks.
4. For traders – (a) take profit on FMG at $2.20 and $2.40, stops under $1.90 (b) I still believe aggressive traders can still buy STO and WPL for decent gains

*Watch for alerts

What Matters this week

The ASX200 is looking to open 25 points higher on Monday after the Dow’s 0.94% rally on Friday night.


Potential Investing opportunities for the coming week

I am only a seller of equities now and will be looking to reduce both my geared long option positions and equity holdings into strength.

Potential Trading for the coming week

• I will run 1.90 stops on my FMG calls looking to take profit at $2.20 and $2.40.
Traders can buy the oil sector via options, or stock, looking for a short covering rally.


 

Portfolio Holdings

My portfolio outperformed last week, the ASX200 rose 2.8% courtesy of my overweight bank holdings.

1. Challenger (CGF) +2.1% - medium term investment.
2. Commonwealth Bank (CBA) +5.5% - Long term investment.
3. National Australia Bank (NAB) +4.4% - Medium term investment.
4. Vocus (VOC) +0.3% - Medium term investment.

• Cash for future purchases, ~10%.

Australian ASX200

I am looking to spread my portfolio into more growth stocks in coming weeks/months 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 7 – The US 10 year Interest Rate Monthly Chart

 

American Equities

The American indices continue to show signs of topping out for 2015 but a final blow-off now feels likely led by the poor performing Russell 2000 Index as opposed to the S&P500.

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 3% 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 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 seller of the “yield play”.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – BHP Weekly 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 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) 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 rally.

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 rally towards $US50/barrel.

Iron Ore is 50-50 here BUT the trend is 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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