Technicals | May 12 2020
By Michael Gable
Whilst the Australian share market has been range bound for the last several weeks, a number of technology stocks have absolutely smashed it out of the park in comparison. In the last several weeks we have taken a view on Altium (ALU), Appen (APX), EML Payments (EML), Pro Medicus (PME), Technology One (TNE), and Xero (XRO). All of these have had an extraordinary run.
While the S&P/ASX 200 Index continues to trade within a range of about 5200 – 5500, we have noticed a number of market leaders have broken higher. That is, a number of stocks, in the last few days, have developed a much more bullish profile. Companies that we have recommended such as Macquarie Group (MFG), Magellan Financial Group (MFG), Aristocrat Leisure (ALL), to name a few, are trading up at levels not seen since early March.
It is interesting to see market leaders actually take the lead here and that gives us some important insights into what we should be investing in. That is, it backs up our ongoing commentary that the best way out of a sell-off like this is to concentrate on the "best of breed" stocks in each sector. Another stock that matches this charting profile is Harvey Norman Holdings ((HVN)) which is joining these companies in breaking free of its recent range.
After the initial bounce in March, HVN then drifted back to consolidate the move in a flag formation. The last few days has seen it break this flag on strong volume. We should now see it rally higher from here. There may be some slight resistance around $3.30 but the obvious target level would be near $4.00. For those versed in Elliott Wave theory, it also sees this move being "Wave 3" at 1.6x "Wave 1".
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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