Market Matters Report / The Hickman Report - Saturday 9th November 2013

By Market Matters 09 November 13

The Hickman Report - Saturday 9th November 2013

Last week was very quiet for the ASX200, only trading within a 58 point range all week, although some significant daily swings occurred in the US as people balanced the benefits of an improving economy against rising interest rates.

Hi All,

What Mattered Last Week

Last week was very quiet for the ASX200, only trading within a 58 point range all week, although some significant daily swings occurred in the US as people balanced the benefits of an improving economy against rising interest rates.

  • ANZ, NAB and WBC all went ex-dividend last week taking approx. 20 points from the index.

  • All-time highs from CBA last week hitting $79.88.

  • The RBA minutes were more dovish than anticipated implying room for more rate cuts.

  • Canadian miner Teck Resources sold it’s $500m stake in FMG at $5.50 (a 3.5% discount to Thursdays days close).

  • Iron ore rallying when all analysts have it earmarked to fall.

  • US mutual equity Funds still receiving significant inflows – over $110b ytd, the opposite to Bond Funds.

  • The Dow rallied 168 points on Friday night; focusing on improved economy and NOT potential stimulus withdrawal.


What Matters This Week

  • November begins historically the best 6 months for the US markets – with small caps kicking in.

  • Also, November begins historically the best 3 months for the US markets.

  • The 6 month period has averaged a gain of 7.1% since 1950.

  • The S&P’s rally in October is statistically a very bullish indicator into 2014.

When you read the above, it should be a lot easier to buy than sell – apart from gold stocks! November usually simply rallies due to institutional cash inflows which is occurring.

So I remain bullish equities for 2014 but I do believe a decent correction is looming – around 8%.

  • The story remains the same, too many people are hoping to buy around 5,200 so it won’t get there.

Retail investors will not exit the yield play but institutions are likely to start switching in early 2014 looking for growth.


Trading For The Coming Week

Warren Buffett said “investors should try to be fearful when others are greedy and greedy only when others are fearful”. This is a quote I consider often, especially when looking to go against the herd – see OGC comments below.

  • Overall the market remains clearly bullish and will open at fresh highs for 2013 on Monday.

  • Monday is going to be very interesting, a lack of selling may drive us up towards the 5500 area sooner rather than later.

  • I am looking to increase long exposure to QBE any buying close to $15 is good risk reward.

  • I am looking to buy MQG if it falls significantly ex div. on Monday.

  • I am a buyer of FMG around $5 but this is unlikely to occur this week.

  • I am looking for triggers to buy OcenaGold into sector weakness – it was up on Friday even others were all down.


Market Matters' View

  • Bullish: Australian Banks (m), ASX200 (m), Dow (m), FOX (m), FTSE (w), Hang Seng (w), IBEX (m), MQG (w), NASDAQ (m), QBE (m), S&P (m), SUN (m), WES (m) & WOW (m).

  • Neutral: AMP (w), BHP (w), CSL (m), FMG (w), Nikkei (m) , NZ (m), RIO (w), SEK (w), STOXX (w).

  • Bearish: China (w), Copper (m), Gold (w), NCM (m).

Time Frames - (d) = daily, (w) = weekly and (m) = monthly.


Australian ASX200
I remain bullish on a monthly basis, plus we are in a seasonal very bullish phase. Most people were too afraid to buy closer to 5000 because of media coverage surrounding the US debt default situation – now fear of missing out is emerging, and 5600 is looming! Currently every retracement soon reaches hungry buyers. The yearly range targets 5450 and a simple monthly abc targets 5670. 












American Equities

The American indices look set to rally into December with the Dow targeting over 16,000.











 

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 with a stop under 6275. The Spanish IBEX has reached my long term target plus the short term pattern targets a 10% rally minimum. 





 

Asian Indices

Asian indices remain positive but have been underperforming. The Nikkei has been trading out of control, under the weight of stimulus and intervention.





 

Australian Stocks

Buying sustainable yield and selling XJO calls has been a logical strategy over recent years, however, the risk of rising bond yields took the tarnish off this space but it has returned with a vengeance; I am now recommending a more balanced portfolio – my view is that the next move in rates is up! Overall the major stocks in the ASX200 remain clearly positive and I remain a net buyer.

Stock picking is at a premium as is demonstrated by BOQ outperforming in the Banks and FMG in the resources space.












































Australian Dollar  

The $A is looking very heavy, the recent bounce was a little greater than anticipated breaking 97c, renewed weakness now looks likely with an ultimate target of 81-82c. 


Commodities

The gold chart looks bullish longer term targeting fresh recent highs, likely over $2,000 suggesting inflation - confirmation requires a close over US$1,480/oz. On a weekly basis, gold and respective stocks remain bearish targeting new lows for 2013.

Also, the amount of money tied up in Gold ETF’s (Exchange Tradable Funds) that did not exist pre 2004 is extremely scary! Having recently visited China, the only two investments that interest locals are property and gold……not reflected the price yet.

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





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



 

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