Market Matters Report / The Hickman Report - Saturday 8th November 2014

By Market Matters 08 November 14

The Hickman Report - Saturday 8th November 2014

The Hickman Report - Saturday 8th November 2014

Overall Market Matters macro view

Australian equities had an ok week closing in positive territory after a surprisingly strong rally on Friday, the ASX200 rallied 23 points (+0.4%), world equities were mixed e.g.on Wall Street the Dow rose 183 points (1.1%) but Europe fell with the Euro Stoxx 50 falling 48 points (1.5%). Over the last week we had promises of further mass financial stimulus from Europe and especially Japan but interestingly equities seem to be tiring - we should remember the Dow is up 69% since the lows of 2011. Equities are scarily following the road map I have been forecasting over recent weeks. Firstly I want to clarify exactly what I am targeting over coming months so hopefully we can all trade / invest successfully:

 

1. Short term I expect a classic seasonal mid-November pullback in equities, see below illustration e.g. For the ASX200 2-3% would be ideal but I expect only around 2%. This is an unsurprising phenomenon with 3 of our big 4 banks going ex-dividend in early November.

2. I then anticipate a classic Christmas rally into a major top, approximately 2-3% above today’s levels in the Dow.

3. I am then forecasting a 2000-2500 pullback in the Dow approx. 15% i.e. Phase 4 on chart 14. I am envisaging this pullback taking the ASX200 back towards the 5000-5100 level.

Last week I recommended it was time to commence strategically positioning ourselves for these potentially significant moves.

 

1. Closing any leveraged long positions which I did by reducing my equity holdings – this will be ongoing.

2. Closing any short gold / gold stock positions – this looks good after gold rallied $36/oz. (3.2%) on Friday night.

 

I think gold will rally at least $200/oz. from current levels over coming months which is likely to coincide with weakness in equitiesI do not have any buy signals yet but I will be watching Newcrest (NCM) and Regis Resources (RRL) very closely.

 

This week there are again a few clear current technical charts:

 

Bullish:  US Indices should trade another 3-4% higher, CBA looks set for a new all-time high, Seek is bullish targeting $19.

 

Neutral: Gold and related stocks are now neutral, the $A is now neutral

 

Bearish:  The US Indices are heading for a 15% correction in coming months, European Indices will continue to underperform,

 

My conclusion:

 

  • Equities are in the process of making a significant top into Christmas.

What Matters this week

The ASX200 is looking to open unchanged on Monday, around 5550; I am 50-50 short term but a trading buyer of any 100 point pullback.

 

 

 

 

Potential Investing opportunities for the coming week

 

  • I am a “drip feed” seller of local stocks into strength now overseas indices are within 3-4% of my targets and trading at all-time highs.

 

Potential Trading for the coming week


  •  I remain 50-50 short term but a strong buyer of any 100 point pullback.

 

 

 

 

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

 

Portfolio Holdings

 

Last week my portfolio had another good week outperforming the ASX200 which rallied 0.4%.

 

1. ANZ Bank (ANZ) -1.9% BUT ex-dividend.

2. Ansell (ANN) +2.5%

3. Bank of Queensland (BOQ) -2.2% BUT ex-dividend.

4. Challenger (CGF+2.9%.

5. Commonwealth Bank (CBA) +2.8%.

6. Flight Centre (FLT) -1.3%.

7. Insurance Australia Group (IAG) -0.6%.

9. Seven West Media (SWM) +4.1%.


*I sold ANZ, FLT and part of ANN during the week.

  • Cash, around ~10%.

 

Australian ASX200

 I am again neutral the ASX200 for the week ahead but still positive overall into Christmas before I expect switching to very negative.

 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 3-4% away.

 Chart 8 – Dow Jones Index Monthly Chart

Chart 9 – Dow Jones Index Daily Chart

Chart 10 – S&P 500 Monthly Chart

Chart 11 – S&P 500 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 neutral after recent underperformance.

Chart 15 – Euro Stoxx 50 Weekly Chart

Chart 16 – FTSE Weekly Chart

Chart 17 – Spanish IBEX Monthly Chart

Chart 18 – Spanish IBEX Weekly Chart

Chart 19 – German DAX Monthly Chart

 

Asian Indices

Asian indices are neutral at present. However, Japan has been extremely strong courtesy of stimulus announcements, I would be  a seller of this surge.

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 but still anticipate selling all / part in coming months. Plus I am watching gold stocks closely.

Chart 23 – BHP Daily Chart

Chart 24 – Santos (STO) 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 – CBA Quarterly Chart

Chart 31 – ANZ Bank (ANZ) Monthly Chart

Chart 32 – Westpac Bank (WBC) Weekly Chart

Chart 33 – National Bank (NAB) Weekly Chart

Chart 34 – Macquarie Bank (MQG) Weekly Chart

Chart 35 – Bank of Queensland (BOQ) Weekly Chart

Chart 36 – AMP Weekly Chart

Chart 37 – Challenger Financial (CGF) Monthly Chart

Chart 38 – Suncorp Group (SUN) Monthly Chart

Chart 39 – Insurance Australia (IAG) Monthly Chart

Chart 40 – QBE Insurance Monthly Chart

Chart 41 – Wesfarmers Ltd (WES) Weekly Chart

Chart 42 – Woolworths Ltd (WOW) Monthly Chart

Chart 43 – Seek Ltd (SEK) Weekly Chart

Chart 44 – Real Estate Australia Group Ltd (REA) Monthly Chart

Chart 45 – Telstra (TLS) Monthly Chart

Chart 46– M2 Group Ltd (MTU) Monthly Chart

Chart 47 – Crown Resorts Ltd (CWN) Monthly Chart

Chart 48– Ansell Ltd (ANN) Monthly Chart

Chart 49– CSL Ltd (CSL) Monthly Chart

Chart 50 Ramsay Healthcare (RHC) Monthly Chart

Chart 51– Resmed (RMD) Weekly Chart

Chart 52 - Fairfax Media (FXJ) Monthly Chart

Chart 53 – Seven West Media (SWM) Monthly

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 have “cracked” and technically I am ultimately targeting the 81c area but a break back over 87c will be positive.

 

Commodities

Gold remains made fresh lows and bounced well on Friday, I am watching closely for buying triggers.

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 mildly negative at present.

Chart 61 – Gold Monthly Chart

Chart 62 – Copper Weekly Chart

Chart 63 – Crude Oil 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

Level 15, 60 Castlereagh Street

Sydney NSW 2000

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