Technicals | Jul 04 2017
By Michael Gable
It's interesting how two weeks after "Oil hits bear market territory" hits the headlines, the commodity has had its best run of gains this year, rising 7 days in a row. We looked at Woodside Petroleum (WPL) a few weeks ago and noted that it should dip under $30 and then bounce again. Having done that, we can safely say that current levels represent a buying opportunity. On the back of that, we have had a look at the Oil Search ((OSH)) chart this week and that also looks like a buying opportunity.
There has been a bounce generally in resources with our tip on Bluescope Steel (BSL) at the end of still May doing pretty well and it now has an upside target of about $15. Banks should also bounce here in the short term. The other item of interest in the last week is bond yields. Bonds have been sold off and yields are going up again. This has provided a bit of red ink for the bond proxies such as infrastructure and property stocks. Gold is also a bit sluggish but still provides a good medium-term hedge against further market weakness.
Oil Search
OSH broke under some trendline support in early June but the last week has looked very bullish on the chart. In the last week (circled), we can see OSH retesting the June low and then bouncing very strongly. We have also see a buy signal generated on the MACD. OSH is likely to retest resistance near $7. If it can get above that, then it becomes clear that weakness in June was a "false break". This means that OSH could rally back up towards $7.50 where we will need to assess whether it will go on to rally even further. OSH looks like a buy here and traders should consider a tight stop near last week's low.
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Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)
Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services.
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
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Disclaimer
Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). 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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