Market Matters Report / The Hickman Report - Saturday 23rd May 2015

By Market Matters 23 May 15

The Hickman Report - Saturday 23rd May 2015

The Hickman Report - Saturday 23rd May 2015

Afternoon All

The ASX200 has just experienced a fortnight of choppy / sideways trading after the aggressive sell off in early May. I believe patience remains the key as opportunities are not currently as prevalent as landmines! This scenario will change and at times during 2015, there will be more quality investments / trades than we have funds to allocate. Warren Buffett’s most famous quote sums up exactly why investors should be happy to stay on the sidelines:

• Rule No.1: Never lose money. Rule No.2: Never forget rule No.1 – Warren Buffett.

The much owned “yield play” remains the weakest sector of the market at present as overseas long term rates appear to have bottomed but I’m a little more 50-50 on interest rates in Australia. Ongoing strength from the Healthcare sector and a renewed interest in Energy / Retail has managed to keep the ASX200 over 5600. However it remains important to have a definite plan in place if the correction unfolds as I anticipate, both in the overall market and individual stocks.
As I have been significantly cashing up over recent months, especially by selling my banks at much higher levels, I’m watching their correction with notable anticipation– over 15% to-date, see chart 5b. Some stocks that I am watching carefully from both an investment / trading perspective are below:

Investment - CBA buy my first 1/3 under $81 – see chart 32b.

Trading - RMD buy under $6.50 – see chart 52 and MYR – buy under $1.25.

Overall I see far more bearish signals than bullish and hence I will continue to sell call options (part hedge) over my share portfolio – an advanced trading / investment action that is definitely not suitable to all people.

I look forward to answering any questions in next week’s webinar.

Summary:

No major change after markets recent sideways activity:

1. I will remain patient on purchasing banks but yield hungry investors may want to consider purchasing a % into likely weakness early on Monday, I would select BOQ if not owned and ANZ / CBA from the “Big Four”.
2. I continue to have no interest investing in the resources sector.

*Watch for alerts next week.

1. For traders – I will be looking for opportunities to go short over the next few weeks with decent risk / reward.

What Matters this week

The ASX200 looks likely to open unchanged on Monday.


Potential Investing opportunities for the coming week

Hopefully investors are now sitting on a healthy cash position awaiting buying opportunities – see above.

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 fell -1.2%.

1. Bank of Queensland (BOQ) -1.3% - medium term investment.
2. Mirvac (MGR) -0.5% - medium term investment.
3. Vocus (VOC) -0.2% - Medium term investment.

• Cash for future purchases, ~45%.

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 5b ASX200 Banking 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. I no longer am a net seller of the “yield play” after its 15% correction and looking to buy growth / yield 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 32b – CBA Daily 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 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
marketmatters.com.au

Reports and other documents published on this email (‘Reports’) are authored by Market Matters independently of Shaw Stockbroking Limited (‘Shaw’). The Reports represent the views of Market Matters and those views may be contrary to views expressed by Shaw, Shaw Research and Shaw advisers. The Hickman Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
The author holds an interest in the financial products of BOQ, MGR, and VOC.