Technicals | Jun 02 2020
By Michael Gable
In the last week, the S&P/ASX 200 Index has added over 200 points and it is well on its way towards 6000. At the risk of sounding like a broken record, it is all about getting exposure to stocks that in March were pricing an apocalypse, but are now trying to recover to more acceptable levels. That is, for now, we continue to favour stocks that benefit from the reopening of the economy. Defensives (those with low growth) will have the odd day up, However, if you are looking longer term, they should underperform from here.
Last week we had the Sydney Morning Herald publish an article of ours that explains why the market is going up and why it can continue to do so. Judging by the since deleted social media posts in response to that, there are a lot of angry people out there who disagree. Angry at me, perhaps, because they have missed out on the easy trade and are watching their hopes of a March retest evaporate before their eyes. At some point they will step in and there may well be a wall of money that pushes stocks to levels where they shouldn't be. So therefore, at some stage the smarter money will start selling. When we see evidence of this, then we will have to take some off the table. But I cannot predict the future. For now, we just have to stay exposed to the right areas and let the market tell us what it wants to do next.
One of the sectors that is being bought up, due to this theme of the economy reopening, are the building stocks. Our tip on James Hardie Industries (JHX) in early May has already returned over 25 per cent, so in today's report we look at the chart of Adbri (formerly Adelaide Brighton) ((ABC)).
In the last few days, ABC broke beyond its recent trading. Price action is also looking very bullish now. There should be further upside from here for ABC. Over the next several weeks, we expect there to be some resistance to come in near $3.40 – $3.60.
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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