Overseas markets ended the previous week on a high with both the Dow Jones Index and the S&P500 index closing at all time highs on Friday. This was achieved on the back of the surprise announcement from the Bank of Japan to increase its stimulus program which includes an increase in its purchasing of Japanese Government Bonds and exchange traded funds.
The other stimulus to the US markets has been the better than expected third quarter earnings report. So far 70% of stocks have reported their 3rd quarter earnings and more than three-quarters of these companies have reported above analysts estimates.
The major indexes have now rallied from the September and October correction and have pushed to all time closing highs. I for one was expecting the resistance levels to hold in the short-term but bullish momentum has easily pushed beyond these technical levels.
The chart for the All Ords Index does not provide as bullish a picture as that of it’s US counterparts. Clearly further bullish movement on the US markets will continue to push the Australian markets higher but the All Ords Index is likely to meet resistance at 5670 points as shown on the chart below and it would not surprise to see a reversal at this price level.
One stock from the Australian market to look out for is that of NEXTDC (NXT) as charted below.
The stock was in a strong downtrend over the past 12 months with a breakout from the downtrend in late October with the subsequent appearance of a higher high and higher low to signal the start of an early up trend. The 20 and 50 day moving averages have also formed a bullish cross. I will have this on my watch list and will look to any retracement as being a potential to enter on the long side.
Sirius has moved into an early up-trend and has paused at $3.50 which is acting as resistance. Positive earnings reported on Tuesday could look at pushing the share price through this resistance to continue the up-trend.
Wednesday July 23rd and the Australian share market had a positive day with the broader All Ordinaries Market Index reaching at a six-year closing high. The index closed up 0.8% at 5567 points after reaching an intraday high of 5587 points, this was on the back of positive movements on Wall Street markets overnight.
The All Ords index has been struck in a trading range over the past few months as previously mentioned in my last blog. Today’s price action has provided a positive bullish signal that further rises may be following, but attention will turn back towards the US markets over the next few weeks which is in the midst of its profit reporting season. If US company reports are positive then this will continue to push the Dow Jones Index up which will then follow through onto the Australian share market.
With today’s resistance breakout technical traders like myself will be hoping that the resistance level of 5540 will now hold as short-term support on any pullback.
Macquarie Group (MQG)
Macquarie Group Limited provides banking, financial, advisory, investment, and fund management services. The share price chart below bears a similar resemblance to the one above with the price stuck between a trading range over the past three months. As did the All Ords index the share price for Macquarie was able to break through the range resistance level of $61.00 today. The price is currently trending upwards in an orderly fashion and today’s breakout indicates that the next leg up is underway.
Shares in Apple have enjoyed a rise in prices for the past few months. The rise in prices has formed an up-trend with a recent retracement forming a trend channel.
The share price had a bullish breakout from the channel on Friday. This provides my trigger to enter a long position. I will look to enter somewhere in the region of the real body candle from Friday (approx $91.00). My stop will be placed under the most recent pivot lows in the region of $89.50.
Tesla Motors, Inc. designs, develops, manufactures and sells fully electric vehicles and advanced electric vehicle powertrain components. It provides services for the development of electric powertrain components and engages in the sale of electric powertrain components to other automotive manufacturers.
The share price for Tesla increased 8.81% on Monday on the back of positive news from the company that it’s long anticipated electric car Model X SUV will be delivered in early 2015.
The share price managed to breakout from its recent trading range and through recent resistance on higher than normal volume. I expect the bulls to come in and push prices higher with targets close to the March highs of $260-$265.
Shares in the social media giant Facebook (FB) increased 4.6% at the close of trading on Tuesday. This increase was on the back of the announcement a PayPal head will join the company to head it’s messaging products division.
The share price below shows the recent price action with a strong breakout from recent congestion. The breakout occurred on relative strong volume which adds to the bulls conviction to rise the share price.
Traders can look at entering a long position with a target price close to the March high of $72.00. Stops can be placed under the most recent congestion low of $62.00.
Austal is an Australian company that specialises in the design and construction of aluminium vessels. Its main products include passenger and freight ferries, luxury yachts and military vessels.
The technical setup for the share is demonstrated in the chart and explanation below.
The weekly chart shows the formation of an early up-trend after a long down trend was followed by a period of consolidation.
The daily cart shows a series of higher highs with a resistance breakout two trading days ago. I am looking to take a long position trade close to the resistance level with a stop under the support level of $1.12.
It was all positive on Wall Street overnight with the Dow Jones Industrial Average hitting an intra-day all time high of 16,704 points. At the close of trading the Dow Jones had increased 0.68% (112 points) to close at 16,695 and breakout above December resistance which it had attempted to surpass over the past few months without success. Momentum could now continue to push the index forward to resume it’s up-trend so traders can look for opportunities in stocks that make up the Dow Jones Index. I was able to identify two such shares in Catepillar Inc and General Electric that show positive technical setup’s for long position trades.
Catepillar Inc (CAT)
Caterpillar Inc. (Caterpillar) is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The stock price is in an up-trend with yesterday’s trading showing a triangle breakout. I will wait for confirmation of the breakout today and look to place an order to buy if the price can open above yesterdays low. The up-sloping trend line should offer support and seems a logical place for a stop-loss.
General Electric (GE)
General Electric Company (GE) is a diversified technology and financial services company. The products and services of the Company range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products.
After a sell off in January the price has steadied and risen in an orderly up-trend. Recent price activity has resulted in some consolidation with a pending up-side breakout a possibility. If this does occur then the price could continue up-wards with a target of $28.00. At this stage I will wait for the box breakout to occur before committing to any long position trade.
Sirtex Medical Limited (SRX) is a biotechnology and medical device group whose primary objective is to manufacture and to distribute effective liver cancer treatments utilising small particle technology to approved markets in Asia Pacific, Americas, Europe, Middle East and Africa (EMEA). Sirtex’s key product is SIR-Spheres microspheres, a treatment for liver cancer.
From a technical perspective the share price broke out to an all time high of $16.80 on Monday after a positive market presentation delivered by company CEO Mr Gilman Wong in Sydney on May 8th.
The chart below shows the formation of an ascending triangle with a horizontal resistance level at $16.40. The share price was able to breakout and close above this resistance level on Monday May 12th on good volume. This breakout is likely to lead to further price increases in the medium term. The share price was supported by the 50 day moving average so any share price weakness may find support at this dynamic support level.
AMP (AMP) is a listed company on the Australian Stock Exchange and provider of life insurance, superannuation, pensions and other financial services in Australia and New Zealand. AMP has a market capitalization of over $14 billion.
The chart below shows the 12 month price action. A short-term down trend was broken in late February with the subsequent formation of an ascending triangle with a horizontal resistance level of $5.10. On this setup I will be waiting for a resistance breakout and close above $5.10 to act as my trigger signal to go long (buy).
If the resistance breakout does occur then based on the measured moved theory the height of the triangle extrapolated from the resistance level provides a target level of $5.50.