Technicals | Apr 07 2020
For the last few weeks, we have been optimistic that markets will bounce higher, and so far so good. The moves we are seeing are not as large as a few weeks ago, which is a good sign. However, there is still further scope for markets and stocks to settle down even further. We still favour gaining an exposure here to select, large, high quality blue chips stocks like CSL, Cochlear (COH), ResMed (RMD), Macquarie Group (MQG), Magellan Financial Group (MFG), to name a few. It is best to stick with companies that are the best in their sector.
Our buying of energy stocks such as Woodside Petroleum (WPL) and Santos ((STO)) in the last week or so now seems to be on the money with good support now coming in for those shares. In today's report, we have a chart of Santos to show you what we are seeing. With the energy sector looking like a basket case, it has given us a good opportunity to get involved – especially since price action in the last couple of weeks has indicated to us that there has been plenty of accumulation down at these levels.
Since the lows in mid March, STO has gone on to make a couple of higher highs and lows. We have also seen buy signals triggered on daily RSI and MACD (circled). The March low was also a successful retest of the lows from 2016. We expect STO to recover from here. Short-term resistance would be expected near $5.15 and $6.70, which also represents the 38.2% and 61.8% Fibonacci retracements of the January to March decline.
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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
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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