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

This post is an extract from the newsletter dated 23 May 2016. You can access the full version of the article HERE.

 

BUY RECOMMENDATIONS

Bellamy’s Australia (BAL)

Shares in this organic infant formula company traded below $9 a few weeks ago before bouncing back. We can see the downside momentum is slowing down. Interestingly, when it bounced from the lows a few weeks ago, it formed a hammer on a weekly candlestick chart, which is a reversal signal. With BAL well supported at $10, we believe the share price will head higher again. The first resistance level is between $13 and $14.

Gateway Lifestyle Group (GTY)

Offers designer homes in a community environment. Price action is looking positive. It listed in June 2015 and began trending higher. The stock was tracking sideways in March and early April before breaking out about month ago. If GTY can hold above $2.70, then it should move up, possibly to a new high towards $3.10. The shares were trading at $2.755 on May 18.

HOLD RECOMMENDATIONS

Austal (ASB)

It hit a low earlier this year on large volume before bouncing back to form a piercing pattern on the candlestick chart. This indicates an exhaustion of sellers and a reversal. We have also seen buy signals triggered on the relative strength index and the moving average convergence divergence. Since that low in January, ASB has been trending higher, making higher highs and higher lows. Current levels offer good support for ASB, and we believe it should head higher until it hits resistance near $1.80. Shares in the ship builder were trading at $1.42 on May 18.

Crown Resorts (CWN)

Price action looks interesting against a backdrop of CWN selling down its Macau stake and privatisation rumours. Since last year’s low, CWN has been making higher lows, but hasn’t been making higher highs. However, any strong close above mid $12 levels should be viewed as a positive. If that happened, we see a projected target towards $15. The shares were trading at $12.04 on May 18.

SELL RECOMMENDATIONS

Orora (ORA)

In January, we recommended ORA here as a hold when it was near $2.20. Now that it’s moved towards $2.80, the stock looks overbought on the chart and is now trading well above consensus targets. We are profit takers in this global packaging company and will look at it again on any weakness. The shares were trading at $2.71 on May 18.

Cochlear (COH)

A breakout lifted the stock from below $90 in November 2015 to above $110 in early May 2016. The chart looks toppy and, in our view, the stock is getting expensive. We can see downside risk towards $100 again, so it may be time to lock in some profits. The hearing implants maker was trading at $118.52 on May 18.

 

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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.

All share price charts are courtesy of AmiBroker, unless stated otherwise.