Breather For BHP

This story features BHP GROUP LIMITED. For more info SHARE ANALYSIS: BHP

By Michael Gable 

This week will be light on news with Wednesday's CPI data being the only highlight. The Australian market has had a great run over the last couple of weeks as predicted and is getting close to our target.

As mentioned back on 8 March and again on 5 April (when the market was at 4995), our view was that the market should head towards a target of 5350 before finding strong resistance. We are now well on our way to our target and still expect a move to over 5300. Once we get there the market should drop away. It will be interesting to see if it is a shallow drop towards 5200 before a final push through resistance and therefore much higher levels. Or if everyone is correctly guessing a "sell in May go away" event, then our market could head back to the lower part of the range near 4900. Neither scenario is clear as yet as the market will often do the opposite of what everyone expects it to do.

Today we have a look at BHP Billiton ((BHP)), following the stock's solid run.

 

On 19 January when BHP was trading at $14.63, we commented that "There is a good chance for BHP to have a decent bounce now in the short term" where the "first major resistance level is a little over $22" and "those with a bit of risk appetite may have a short-term trade now on the long side." BHP is currently up nearly 40% since we made those comments. It looks as though it may not quite reach $22 yet but a great return nonetheless. Price action was weak on Friday and we have also seen a short-term sell signal on the RSI (circled). The stock is likely to therefore head towards $18 now before we will reassess but those lows in January are likely to hold for quite a while.
 

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

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

Disclaimer

Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). 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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