Michael Gable is an expert guest commentator for the stock market newsletter thebull.com.au.

This post is an extract from the newsletter dated 16 October 2017. You can access the full version of the article HERE.

Buy Recommendations

PME
After peaking in July 2016, they underwent a consolidation against the prior uptrend. We can now finally see PME break out of this consolidation on good volume. This means that PME should now resume the uptrend and head to new highs very soon.

WSA
Price action suggests that WSA is now breaking above a 3 year downtrend line. If it can hold these levels, then we could see a fantastic move higher, not too dissimilar to what we’ve seen with other mid-tier resource stocks in the last year. The charts indicate a potential rally from here towards $6.

Hold Recommendations

BHP
We can see that BHP has gone up to the January high and then stopped short. This is a good sign if you are bullish on BHP. What we want to see now is BHP consolidate here and wash out all the sellers who are taking their profits up at these levels. Once that is done, then BHP would be ready to break through $28 and head into the $30’s.

NCM
At the moment the stock is trading in a symmetrical triangle. This triangle is also sitting on top of the previous resistance point near $15, which is a good sign. The shares could potentially break either way so it is a hold for now. But we would be eyeing a break to the upside, through $24 – $25. If that happens, then that could result in a rally up towards $35.

Sell Recommendations

 

MTS

MTS spent a few weeks in September testing the $1.80 level before finally being sold down heavily on increased volume. This appears like classic reversal behaviour and we believe that MTS is going to now trade lower from here. There is some trendline support near $2.20 and then our next target of support is near $1.90.

QUB
After jumping higher on the day of the August results, QUB was then sold down dramatically. This clearly is not a good sign and shows that the stock was overvalued. We should expect to see QUB head lower at least for the short term with support coming in around $2.25.

 

Michael Gable is managing director of Fairmont Equities.

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