Technicals | Feb 01 2022
This story features MACQUARIE GROUP LIMITED. For more info SHARE ANALYSIS: MQG
By Michael Gable
In the past two days, we have seen US markets bounce from some obvious support levels. Is this one of those bear market rallies that we spoke of last week, only for markets to take a final dip lower? Or is this all we are going to get and markets will go up again? At best, if that is "the low", then we don't expect a lot of follow-through on the upside just yet. If the pullback is over, then we will likely see a bit more of a base form here, daily ranges will contract, and that will give us some better set-ups. However, the alternative is that we have just seen a bit of a bounce from an oversold market.
If you look back at the last couple of major sell-offs, we have seen these ‘dead cat’ bounces occur after the initial dip. In 2020 we saw that at the start of March before the market continued falling. And in the last quarter of 2018, we had a pause during October-November before the final capitation in December. So, we are once again potentially seeing another one of these pauses. If the market takes out last week's low, then we know for sure that the sell-off hasn't finished and that could therefore lead to a final capitulation. Unless we get a proper capitulation, it is too risky to start buying in such a volatile market. Our advice is to be patient and wait for the set-ups to occur.
In today's report, we don't have any stocks that look like a buy right now of course, but our charting section takes a look at a stock where there seems to be an obvious level for you to keep an eye on — Macquarie Group ((MQG)).
By falling under the prior low near $190 last week, MQG has technically broken the uptrend. At the moment, it is stuck between what is now resistance at $190, and support near $180. At best we need to see MQG base out here for a while, get back above $190 and then hold it. Otherwise, if it breaks under $180, we believe the next support level will come in near $160. That also happens to be the 38.2% Fibonacci retracement of the 2020 – 2021 rally. A failure of that level would then have us targeting the low $140's.
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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