Technicals | Oct 11 2022
This story features CLEANAWAY WASTE MANAGEMENT LIMITED. For more info SHARE ANALYSIS: CWY
By Michael Gable
Markets had a very strong two-day rally last week and some were thinking that it was a good sign that markets were bouncing off the lows.
However, we maintain our negative call from last week on the S&P 500 Index. Lows generally don't get formed in that manner and this sort of volatility translates to higher levels of risk.
At best, we make a higher low here and then we can consider if there will be some upside. Chasing a two-day bounce like that was never going to work unless it was off the back of an extreme capitulation like in March 2020. We need to bear in mind that September CPI numbers in the US are out on Thursday night, so everything until then will be noise.
Quite simply, if the CPI numbers surprise by quite a bit on the downside, then markets will bounce, otherwise we go lower again.
Impatient investors last week believed that the 25bps increase from the RBA was a "pivot", or at least a sign that rate rises were easing, but it wasn't.
The number of rate hikes ahead of us remains uncertain for now. Unless Thursday's CPI numbers a big positive surprise, the US Fed will continue raising rates and the market will be disappointed and uncertain. We will therefore need more time and more patience until the Fed stops raising and when the market is ready to rally in a sustained way.
In terms of at least having a "trade-able bounce" like what we saw in March and July, then that can only possibly occur after this Thursday.
Hopefully by next week's report on Tuesday, we have some clearer direction and some lower risk ideas. On that note, buying stocks here before Thursday's CPI release is a risk. However, we have a chart in this week's report on Cleanaway Waste Management ((CWY)).
CWY has broken the uptrend that was in place since 2020 and price action is now looking bearish.
At the very least, it will need to find support at the June low near $2.50.
However, if that breaks, then we would expect lower levels. Investors in CWY can therefore wait for an opportunity to get in at much cheaper prices.
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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