Market Matters Report / The Hickman Report - Saturday 21st September 2013

By Market Matters 21 September 13

The Hickman Report - Saturday 21st September 2013

Hi All, September continued strongly last week, again touching new highs on the ASX200 since June 2008, after the FED failed to Taper QE. However, the last two days of weakness in the US has retraced all those gains, and more, making the coming weeks very interesting. Overall longer term markets look bullish but we are entering historically 2 of the worst weeks of the year for equity markets. With the FED Taper still looming Wednesday nights spike higher may been a medium term swing high. I reiterate there is a lot of people waiting to buy dips so I anticipate a shallow correction, perhaps like below:
  • An “abc” pullback in the FTSE (3.7%) & BHP (to $34 area), RIO to $58, NAB to $34 and NCM just down.

 

Points of interest catching my eye:

 

1.    An enormous number of people looking to buy a pullback in the ASX200.

2.    The S&P entering the worst 2 weeks of the year historically.

3.    Recent weeks have seen outflows of funds from equities in the US for the first time in almost 9 months.

4.    Goldman’s now expecting the FED to start tapering in December – happy Christmas!

5.    Bullard saying last night the Tapering may start as early as next month.

6.    The FED still will be Tapering relatively soon, what difference is a few months to equities that look +6 months ahead?

7.    India surprisingly raised rates on Friday.

 

 

Relevant current seasonal statistics:

1.    Since 1950 September is the worst performing month for US equities, with the last 2 weeks the focal point.

2.    End of quarter restructuring plus general events has often led to nasty month end sell offs.

 

 

Bullish:   ASX200 (m), Banks (m), FOX (m), FTSE (w), IBEX (m), QBE (m), SUN (m), WES (m) & WOW (m).

 

Neutral:   AMP (w), ANZ (w), ASX200 (d) & (w), Banks (d), BHP (d) & (w), CSL (m), Hang Seng (w), MQG (w), NAB (w), NASDAQ (d) & (w), Nikkei (m) , NZ (m), RIO (w), SEK (w), STOXX (w), & WBC (w).

 

Bearish:    BHP(d), BHP $US (m), China (w), Copper (m), Dow (d) & (w), Gold (w), NCM (m), RIO (d) & (m), & S&P (d) & (w).

 

 

I still believe we may have commenced an 8-9% correction in the S&P, but how far the ASX200 corrects, if at all, is much harder!

 

  •  This week I would sell any recovery on Monday, 1/2 size, around 5260 basis Dec. SPI with stops over 5275.



 

Super Portfolios Holding

 

 

We have followed the plan of the last few months which has worked well with us holding 4 of the best performing stocks at present. It now feels that a good profit opportunity was missed in FMG around 480 but I am still targeting $5 later in the year.

  •  I am long FMG, NAB, SUN and WES, delta neutral short respective calls, plus short XJO strangles net bearish here.
  • Cash, under 5%.

 

I am a happy buyer of FOX into weakness and Gold stocks if the fall to fresh 2013 lows.


Australian ASX200

I remain bullish on a monthly basis, targeting a decent break of 5250, when looking at lower time frames and overseas indices a pullback from here would not surprise. The yearly range targets 5450 and a simple monthly abc targets 5670. 

 

My biggest concern has come from my target of a 8-9% correction in the S&P, recent price action has proved these concerns to be unwarranted.

 

 

 

 

 

 

 

American Equities

The American indices may still have the predicted 8-9% correction, but I am bullish if we get that retracement. The daily charts are messy after last week’s spike up after the unexpected failure to Taper by the FED however, the last 2 days have retraced all those gains.

 

 

 

 

 

 

European Indices

 

 

The European indices now look net bullish  for 2013 with the FTSE starting to look very promising, I would be an aggressive buyer of an “abc” pullback. The Spanish IBEX has reached my long term target plus the short term pattern targets a 10% rally minimum. The overall position of the European indices is the reason I have bought NAB ahead of ANZ after CBA went ex-div.

 

 

 

 

Asian Indices

 Asian indices are gaining clarity and becoming positive. The Nikkei is trading out of control, under the weight of stimulus and volatile collapsing yen.





Australian Stocks

 

 

Buying sustainable yield and selling XJO calls has been a logical strategy over recent years, however, rising bond yields is taking the tarnish off this space and I am now recommending more balanced portfolio’s. Overall the major stock’s in the ASX200 remain positive but consolidation / a pullback in coming weeks to buy would not surprise. Basically look to buy weakness BUT there may well  be some competition.









 
















Australian Dollar 

 

The $A is looking very heavy, the recent bounce was a little greater than anticipated breaking 95c, renewed weakness now looks likely.



Commodities

The Gold chart looks bullish longer term targeting fresh recent highs, likely over $2,000 suggesting inflation - confirmation requires a close over 1480. On a weekly basis Gold and respective stocks are looking VERY bearish targeting new lows for 2013.

Also, the amount of money tied up in Gold ETF’s that did not exist pre 2004 is extremely scary!

Copper remains negative on a longer term basis, a very similar chart pattern to Newcrest Mining and we saw what happened there!!




Shawn Hickman

 


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