Michael Gable is an expert guest commentator for the stock market newsletter thebull.com.au.
This post is an extract from the newsletter dated 11 July 2016. You can access the full version of the article HERE.
Automotive Holdings Group (AHG)
The giant automotive dealer has found strong support and we’re now starting to see a bullish reversal on good volume. Momentum indicators suggest the downward trend from the start of this year is ending and we expect AHG to head higher. There will be some resistance near $4 and again close to $4.20. Full year results in August are likely to be the major catalyst for the stock. The shares were trading at $3.885 on July 7.
The medical device maker has been range bound for most of the past year. But in the past several months, it’s been making higher lows. It recently breached resistance near $8.30. If it can hold above the $8.30 region, we should start to see renewed buying interest that’s likely to push the stock higher towards $9.50. The shares were trading at $8.52 on July 7.
Village Roadshow (VRL)
The share price took a battering after its half year results in February. After making a false break to the downside a few weeks ago, the shares rebounded strongly and appear ready to move higher leading into full year results in August. We can also see a buy signal triggered on the weekly MACD (moving average convergence divergence). Resistance levels are at $6 and then near $6.65. The shares were trading at $5.36 on July 7.
Origin Energy (ORG)
An inverse head and shoulders pattern has now formed down at these levels. The neckline near the $5.30 region broke in the past couple of weeks. If we measure the distance between the neckline and extrapolate, we arrive at an upside target of around $7.50. We will turn negative if ORG starts trading back beneath that neckline level. The shares were trading at $5.71 on July 7.
James Hardie Industries PLC (JHX)
The building materials stock looks vulnerable. Firstly, we saw a bearish engulfing pattern form on the weekly chart. Recently, the stock struggled to overcome the mid point of that bearish candle. A sell signal has been triggered on the relative strength index. For the past five years, JHX has respected the uptrend line, but we expect it to retreat to that level in coming months. This implies downside risk to between $16 and $17. The shares were trading at $20.76 on July 7.
BHP Billiton (BHP)
In the short term, there’s a risk of it falling back to $15 levels. Since peaking in April, the stock fell sharply for a few weeks. In trying to climb higher, it struggled to make much headway. The stock was sold off heavily on the Brexit result and, if the recent move up struggles again, then BHP may make a final move back below $16. The shares were trading at $19.24 on July 7.
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