Market Matters Report / The Hickman Report - Sunday 22nd February 2015

By Market Matters 22 February 15

The Hickman Report - Sunday 22nd February 2015

The Hickman Report - Sunday 22nd February 2015

Afternoon All,

Last week, the ASX200 showed clear signs of tiring after the recent 680 point rally closing up just 4 points. The upside momentum is falling fast and I believe we will now see 2-3 weeks sideways price action from the ASX200 that takes the market back towards 5725 (-2.4%), prior to further gains. On Friday night, Greece reached a 4-month deal with Europe in an attempt to resolve its mounting debt burden. Interestingly, this band aid was enough to send the US equities to record highs, confirming this mature bull market is not yet over and currently all that matters is Global Central Bank Stimulus. The big performers last week were stocks that reported well / solidly e.g. AMP, Challenger (CGF) and Crown (CWN). I believe the last leg of this bull market, prior to a significant correction, will be a continuation of last week’s trend and less frenzied chasing of the “yield play”.

• The Australian Financial Review (AFR) today is talking of local interest rates potentially down to 1.25%, from 2.25%, if the US delays raising rates. The Australian futures markets are factoring in at least one more rate cut in 2015.

It’s not hard from reading the press to see why equities have rallied so hard as investors chase yield, BUT I believe this trend is very mature and last week’s price action was an indication that the “yield play” may not be the best place to have all your funds for the next 18 months. With markets looking for around 2 more rate cuts this year, I feel a lot of good news is already priced into equities.
I have been an aggressive investor I the yield space over recent years but I anticipate diversifying in the future, everyone is talking like yield is the only and easy game in town:

• Attempt to be fearful when others are greedy and to be greedy only when others are fearful – Warren Buffett.

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

Bullish: The ASX200 while over 5595(weekly), CGF, European Indices (especially Spain), US equities (short term), Chinese Index, Banks, Banks (medium term), Macquarie, REIT’s.

Neutral: RIO, FTSE, Hang Seng, Nikkei, Newcrest (NCM), Regis (RRL).

Bearish: ASX200 back to 5750 (daily), Copper, Crude Oil, Iron Ore, BHP (long term), Flight Centre, Seek (SEK) short term and Woolworths (long term).

Summary:

• I am looking to definitely tweak my portfolio over the coming weeks. I am considering the below:

1. Sell part of my overweight (ex div.) CBA and switch into soon to be dividend paying: Challenger and / or Crown.
2. Sell all / part of my Telstra and switch into Vocus (VOC) for greater growth – ex-div. and after I have held for 45 days for franking credits.
3. Potentially switch more of my bank exposure after historically strong performing April into cash, or a REIT.
4. For traders - I am net short the ASX200 via sold option call options at present and will ideally look to switch to net long around 5750.

*Watch for alerts

What Matters this week

The ASX200 is looking to open 20 points higher on Monday after the Dow rallied 154-points on Friday night.


Potential Investing opportunities for the coming week

• I remain long the yield play but will be looking to switch part of my CBA to Challenger at correct levels.
• Short term I prefer TLS to cash for February dividend and NAB and other banks for future dividends in May.
• I prefer VOC over Telstra for growth over coming years.

Potential Trading for the coming week

• I am a short term seller of the ASX200 over 5900 targeting 5750 area prior to again becoming a buyer.
• I like the REIT’s and CGF at current levels.


 

Portfolio Holdings

My portfolio slightly underperformed last week due to the lack of resource stocks, the ASX200 rose 0.1%.

 

1. Commonwealth Bank (CBA) -3.2% BUT ex-dividend..
2. National Australia Bank (NAB) unch. - Medium term investment.
3. Telstra Corporation (TLS) +0.3%. - Medium term investment.

 

• Cash for future purchases, ~10%.


Australian ASX200

I am looking to potentially switch CBA after they go ex-dividend and take profits on my banks likely in April hopefully over 6000 for the ASX200.

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 are now positive with close stops.

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

European Indices look set to rally another 6-8% 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.

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 industrial stocks that are performing are now looking good.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – BHP Daily 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 33b – ANZ Bank (ANZ) Daily Chart

Chart 34 – Westpac Bank (WBC) Weekly Chart

Chart 34b – Westpac Bank (WBC) Daily 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 49– Stockland (SGP) 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) 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 continues to decline with ultimate technical targets now well under 70c.


Commodities

I remain bullish Gold targeting the $US1400/oz. area but stocks have reached my target area so I am now neutral.

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 I believe is now underway.

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

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 CBA, KDL NAB, and TLS.