BHP Susceptible

This story features BHP GROUP LIMITED. For more info SHARE ANALYSIS: BHP

By Michael Gable 

If there is a piece of advice we hope everyone took from our report last week when describing ways to make money from Brexit, it was the bit where we said: "Our advice is to wait till Friday at the earliest. If you can't get set at a good price, then something else will come along. There's no point chasing it."

It would be an understatement to describe the price action last Friday as being a bit wild. Some of the stocks that we flagged as potential opportunities if the UK voted "remain" were stocks like HGG and CYB. Many brokers on the TV and in their newsletters jumped the gun and started buying these a week ago, but we decided to wait. They have now been smashed over 25% just in the last two days. And this doesn't take into account that at time of writing, our market is set to be in the red again today. We can now safely say that they are off our radar. Patience paid off.

I think any stocks with UK exposure are going to be discounted for a while now and it will be hard to find reliable value there because of the uncertainties. Gold has jumped of course, so there will be more opportunities there soon as the prospect of a US rate hike diminishes. Value will be found very soon in Australian stocks that have no direct exposure to those markets and we are looking forward to that over coming weeks. So stay tuned. In the meantime, we have a chart this week on BHP Billiton ((BHP)).

 

We have followed BHP on a few occasions this year and once again, we are seeing an interesting set-up in the shares. Having fallen sharply across April-May, the stock recovered slightly but it is becoming evident now that this was merely a "flag" formation. With BHP breaking that and retesting it, we are likely to see it drift further south. With a strengthening US$, this could be a further catalyst for lower levels in the short term. We would be targeting levels down under $16 again.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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