Market Matters Report / The Hickman Report - Saturday 6th December 2014

By Market Matters 06 December 14

The Hickman Report - Saturday 6th December 2014

The Hickman Report - Saturday 6th December 2014

Overall Market Matters macro view

I put up our Christmas tree last night, covering the floor in pine needles; let’s look for the markets to deliver some pleasant Christmas presents – ideally a rally to sell.

The difference in performance between different world indices, and sectors within those markets, are at levels I cannot remember in my 31 years in the industry:

1. Last week the ASX200 was up 0.4%, but is down 0.3% for the year, to be 22% below pre GFC highs.
2. For the year : CBA +8.6%, MQG 18.5%, SEK +35%, RHC +42%, SUN +17.6%, but CWN -16%, STO -42%, WOW -6.6%, MYR -43% BHP-17% & FMG -53%.
3. Last week, the Dow was up 0.7% and is up 8.3% for the year, at all-time highs, to be 26.5% above pre GFC highs.
4. Last week the German DAX was up 1.1% and is up 5.6% for the year, at all-time highs, to be 56.8% above pre GFC highs.

*All stock codes in the second line are explained and shown in detailed charts beneath.

More importantly now is what comes for the next 12 months – in a nutshell, I feel it will be more of the same for at least 12-18 months. The US economy is moving ahead nicely, Europe / Japan will be stimulated back to life and I remain concerned as to where Australia fits in with commodities falling fast.

With interest rates looking to fall 0.5-1% in Australia over the next 18 months, I am buyer of weakness in banks and insurers.
• With the $A potentially set for a significant pullback, the current view of the Fed Government’s Future Fund, I like companies with overseas earnings.
I still have no interest in any resource stocks for medium term investing vehicles.

The Murray inquiry announcement is expected tomorrow. With local interest rates set to fall significantly, any weakness in banks will represent great value. I still feel the local banks can rally hard after the Murray findings are announced “sell on rumour buy on fact”.

What I am forecasting for the rest of 2014 and 2015 continues to unfold on track for world indices.

1. Overseas are rallying nicely into Christmas, with my targeted top only around 2.5% higher in the S&P500 and 4% in the German DAX.
2. I remain confident with my view of a 2000-2500 pullback in the Dow approx. 15% (Phase 4 on chart 14), creating another great buying opportunity. I am envisaging this pullback will take the ASX200 back towards the 5000 level.
3. How far the ASX200 can rally, if at all, is likely to be determined by Federal Treasurer, Joe Hockey, tomorrow.

This week there are few new clear current technical charts, but the quality is again good:

Bullish: US Indices should trade another 3-4% higher, European Indices are still bullish targeting fresh 2014 highs, the Chinese Index looks set for more gains, the Gold Sector still looks bullish, Seek remains bullish targeting $19 and I am trading buyer of Woodside (WPL) around $33.50.

Neutral: The ASX200.

Bearish: The US Indices are heading for a 15% correction in coming months, I remain bearish Woolworth’s long term targeting under $25, I remain bearish BHP longer term, and Macquarie Group (MQG) is targeting $55.

My conclusions:

Equities remain in the process of making a significant top into Christmas, early 2015 and Gold should continue to rally.

What Matters this week

The ASX200 is looking to open up 20 points on Monday, around 5355; this is likely to change dramatically after news on the Murray enquiry is released.


Potential Investing opportunities for the coming week

I remain “drip feed” seller of local stocks into strength with overseas indices are within 2-4% of my targets, trading at all-time highs.

Potential Trading for the coming week

I am a buyer of Woodside (WPL) around the $33.50 area for a 7-8% counter trend rally.


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

Portfolio Holdings

My portfolio had a good week outperforming the ASX200 which rallied 0.4% as we benefit from no resource exposure. Challenger is a my main concern after recent Department of Social Services announcement of changes to Care Annuity downgrading the stock by 4% - I will look to exit into any strength.

1. Bank of Queensland (BOQ) +1.5% - Medium term investment.
2. Challenger (CGF) unch. - Medium term investment.
3. Commonwealth Bank (CBA) +1.1% - Long term investment.
4. Regis Resources (RRL) +2.4% - short term trade / investment.
• Cash, around ~15%.

Australian ASX200

I am mildly positive the ASX200 for the week ahead, and overall into Christmas, but Joe Hockey holds the key.

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 are approaching my targets fast with the Dow and S&P500 only approx. 2% away.

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 still bullish targeting fresh 2014 highs.

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 Weekly Chart

 

Asian Indices

Asian indices are neutral at present. However, China is starting to look very 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.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – OilSearch (OSH) Weekly 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 - Australian Retail Index Monthly

Chart 57– Myer Holdings (MYR) Weekly

Chart 58– JB Hifi (JBH) Monthly

Chart 59– Harvey Norman (HVN) Monthly

Chart 60– Australian Dollar (AUD) Weekly Chart

The $A looks to be heading back towards the 81c area minimum.


Commodities

Gold fell on Friday after US unemployment data confirmed strong economy sending the $US soaring. Overall I remain positive while the precious metal can hold near $US1200/oz.

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 due.

Iron Ore is showing no signs of a bottom but interestingly some short covering is emerging in the stocks.

Chart 61 – Gold Monthly Chart

Chart 61b – 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.
Have a great week,

Shawn Hickman
marketmatters.com.au

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The author holds an interest in the financial products of BOQ, CBA, CGF, KDL, NCM and RRL.