Technicals | May 05 2020
After a great rally off the March lows, share markets are now looking like they will consolidate that move. That doesn’t mean they will head backwards – although it is of course a possibility. A market can consolidate by heading sideways for a while. We are starting to clearly see that with the S&P/ASX 200 Index; where the last few weeks has seen it establish a range between about 5200 and 5600. The reality is that our market hasn’t made any progress in about four weeks.
It is a positive sign that we can consolidate like this without heading backwards. For now, we still hold the view that the March lows are unlikely to be revisited. A break under 5200 may cause a change of view, but for the moment we can still see our market heading higher from here. Immediate targets will see us head back to the top of this range near 5600. A break above that will bring on higher levels again.
In today’s report we have analysis on Commonwealth Bank ((CBA)).
The banks have been underperforming the rest of the market during the last month. However, they now look ready to head higher from here. After the initial bounce in March, CBA then spent most of April easing back again. This consolidation resembles a pennant formation, with CBA breaking higher and retesting it during the last few days. It appears as though a low is in place, but upside may well be limited. We can see a major level of resistance just under $68 that will need to be overcome before we can reassess.
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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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