Michael Gable is an expert guest commentator for the stock market newsletter thebull.com.au.
This post is an extract from the newsletter dated 20 March 2017. You can access the full version of the article HERE.
S32 peaked near $3 in December last year after rallying strongly from under $1 about a year earlier. It had been correcting back since that point, forming a flag against the overall uptrend. The stock is now breaking out of that flag on strong volume in order to resume the uptrend. We would look for a retest near that resistance line near $2.70 for an entry point, running a tight stop. If S32 resumes the uptrend here, then we would be looking at targets back above $3.
LLC finally saw a breakout from an ascending triangle that had been forming for the last year, where resistance was just under $15. It has also come back to retest that prior level of resistance, and the fact that it has held that level is a bullish sign. It should now enter a new trading range where the upper limit should occur near $17. We would not want to see LLC dip under support near the $14.60 zone.
Fairfax is looking neutral for now but that can turn positive very quickly. The stock has been trading in a large rectangle for nearly 3 years now. Because it has been doing that for so long, it means that when it breaks out, it will rally very strongly. But it is too early to jump on board. If we see FXJ break out near $1.05, then it should swiftly head towards resistance near $1.35. Until then it is still range bound, but one worth watching.
SGR appears to have completed the downside move from its peak in August last year by falling in 5 waves to a low in February. It should stage a recovery from here so it is worth holding for now, but we can see resistance levels nearby at $5.30 and then further up near $5.60 where profit taking may come back in.
Freelancer has been listed a few years now so we can start to read a bit more into how it is trading. It has shed about half its value in the last year and a half. The most recent rally a couple of weeks ago has seen it turn at the previous swing low near $1. This implies that more pain is in store for FLN shareholders as the shares are likely to go to a new low for the year near support at 70c.
BHP peaked in January near $28 before coming back for a couple of weeks. It tried to then rally again but could only get near $27 before being sold off a few weeks ago on heavy volume. For the moment it seems like the risk with BHP is to the downside. If we get a 3 wave decline (an a-b-c correction) where wave “c” equals 1.6 times wave “a”, then that will see BHP dip under $23. That level would also equal the 38.2% retracement of the rally that started in January 2016. So we would expect BHP to fall into that support zone before re-assessing.
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