The Aussie stock market index XJO 200 & AUD/USD currency pair has followed the US markets bouncing off the lows hit in late March, rising roughly 1,200 points & 7c from trough to peak. With many on fintwit suggesting the lows in stocks are in & the markets are now starting to price in the reopening of the global economy.

However the price action of both markets suggests this bounce is just a counter rally within a bear market for a number of reasons. Firstly, discussing the XJO 200 recovery so far off the lows are much weaker than the sell off trajectory. The long term 52 day moving average (green line) is sloping down, as well as the price action is currently below the MA which means the index is still in bearish mode.

In addition, the volume during the sell off was much more significant than, the volume average in the counter rally so far (see chart), suggesting caution & hesitation is still present which is a red flag.

Currently the price action in the XJO 200 is still forming higher lows & is also sitting above the 10 day moving average (black line). So I’m not suggesting we will see a roll over this coming week as of yet. But instead I’m watching for signs of a reversal pattern & the start of a roll over emerging.
 
The AUD/USD pair below has similar characteristics to the XJO 200 price action set up overall. However the counter rally in the AUDUSD off the lows has been much stronger than the move soon in the XJO 200. This is evident as the pair has recovered to the 52 day MA rising slightly above it before falling just below it again recently.

Similar to the XJO 200 more recently the AUDUSD has been forming higher lows, however as seen in the chart below, has run into resistance of the downtrend line that started back in Dec19. For the AUDUSD pair to begin to turn bullish, we would need to see a breakout out of the downtrend line, as well as the most recent high formed last week as it moves towards 0.65c, with the price to remain above the 52 day MA line.

Given the overall setup presently with the downtrend & the 52 day MA sloping lower, I’m expecting most likely another retest of the downtrend line towards the red box shown, for a lower high formed. If this occurred this week with a breakout to the downside closing below 0.6320 support this would confirm a reversal of the counter rally seen.

In the meantime we need to wait and see how the price action plays out to determine future direction, including whether the bullish run is maintained on the XJO 200 & AUDUSD, or whether the momentum begins to fade & we see a rollover / reversal pattern follow through in the next few weeks.

The bullish thesis with Aussie stocks & AUDUSD many are suggesting may not be warranted, based on the overall price action setup of the charts, with the probabilities of a roll over to either form a higher low or a retest of the low quite high based on technical evidence. But like all trading we need to allow the charts to dictate the required actions first.

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The Aussie stock index XJO last week broke a key uptrend that had been in place since the start of 2019. The index was able to see a recovery during the week, however unlike the US stock indices the XJO index did not recover back above the uptrend line that it failed.
 
So we can confirm that Aussie stocks are looking weak at the moment. However, is it time to go bearish with the latest price action? When it comes to trading, we have to be fluid and open to new information as it comes to make good decisions on likely direction.
 
We have covered the breach of the uptrend, however there are other problems for the bulls. Its sitting below the 10 & 52 day moving average, telling me stocks are under pressure & have lost momentum. The gains we saw since mid week were relatively small moves higher relative to the down days we saw leading into the breach of the uptrend.

Lastly, another interesting red flag for the XJO I covered with members after the Friday close, is that we have closed below the 10 week moving average for the first time in this uptrend rally (see chart below). This usually means that a trend has either ended or is about to end when I see this.

Going forward from here we could be witnessing a change of trend, however for now I have not gone bearish. For my stance to change and go bearish I need to see a confirmed lower high formed, with the 52 day MA turning down. In addition the price action ideally stays below the uptrend line. Lastly if we see a close below the lows recorded last week then I will be bearish Aussie stocks.
 
So for now we have to go with a day by day approach as we wait and see if the other conditions are satisfied. Especially as its possible with earnings season occurring this month that we resume a bullish structure.

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The Aussie index XJO has resilient over the last month as they have been outperforming US stocks, having received a few key tail winds with a pro-business re-election in the Federal Government, an attempt for the Government agencies to loosen credit standards and the RBA giving its strongest indication they are prepared to cut rates soon with multiple cuts now priced in by the market.
 
So its not surprising that the pullback so far for the XJO has been relatively mild, having finished the month respecting its old resistance level now support area around the 6,360 level. Since the XJO price action has been in up trend, the respect of its most recent support so far is positive for the index to remain in trend.

Looking ahead for June we have to be watching to see if a few key bullish points change for the XJO. The index has been comfortably creating higher lows indicating the bulls are still in control of the Aussie index. If we see further pullbacks with international markets volatility, its important that we hold the uptrend line around 6,300 level as a first line of defense.
 
If the uptrend level around 6,300 fails for the XJO, then we need to watch if the price action closes below the 6,220-30 support level. If this occurs this would be the first lower low in 2019 and would signal uncertainty as the bulls would have lost control. If this is followed up by a lower high formed in June, then it would be time to start to be bearish Aussie stocks. However for now there is no reason to not remain bullish, for the XJO index despite the pullback experienced.

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The top 200 largest stock index in Australia (XJO200) has run into long term resistance in May as it failed to breach the 5925 level. After hitting the resistance level late April and early May the XJO index has fallen around 200 points from the recent high of 5925.

Since forming a double top and confirming the reversal lower in May, the XJO index of the top 200 largest stocks is set to continue to fall further as it takes a breather from the recent strong run over the last 12 months. The road ahead for the index isnt clear as a number of major headwinds are approaching making further gains difficult.

Monthly Chart Review

Can The XJO Breakout Of The 5925 Resistance Level?

From a number of technical indicators the XJO index is likely to pause from its recent strong rally higher as it runs into some exhaustion within its uptrend.

Since the the XJO index is in a uptrend that has been running for a number of years as shown in the chart below, its likely that the index will head lower towards its long term uptrend around the 5525 which is its first level of support. If the index continues on its reversal lower towards support it could be several months before we see the chance for the index to make another run higher towards 5925.

XJO Headwinds - Potential For A Break Of Long Term Uptrend

The momentum indicators are supporting a move lower over the next few months leading into earnings season in Australia. In addition the slow stochastic is approaching its peak upper level on the monthly chart and about to cross lower. If the slow stochastic crosses over like it did back in March 2015 (See chart below), we would most likely see considerable correction in the XJO index over a 12+month period resulting in a break of if its long term uptrend. If this was to occur the only thing that could potentially reverse the move lower would be consecutive drops in interest rates by the RBA and or Government stimulus.

Australia's Macro Headwinds Could End The Long Term Uptrend

The other headwind facing Aussie stocks for the remainder of the year and 2018, comes from the macro picture in Australia, as the slowdown of the real estate market has begun with prices starting to fall in Sydney and Melbourne in May (See article below). The property boom up until recently has been driving the economy and a large part of the GDP growth. However this appears to be over as a number of interest rates from the banks, has finally stopped the strong real estate growth in prices. Together with construction boom spending now falling as the banks continue to tighten lending standards likely to slow the economy as well.

Below is a few recent articles outlining the headwinds stocks, real estate and the economy are facing over the coming months.

Weekly Chart Review

The weekly chart of the XJO shows a similar story to the monthly chart, with the index making a double top as well as the momentum indicators falling as the buying spree reaches exhaustion within the XJO index.

The only difference with the momentum indicators is that momentum has turned negative sitting at -62.2 and the slow stochastic has turned several weeks ago and looks to continue to move lower of the next  few weeks.

On the weekly chart I would look out for a pull back in prices, potentially to the target area drawn on the chart around support of 5570. The key to watch is if the XJO index breaks down further closing below the blue uptrend line on the weekly chart.

If the weekly uptrend (blue line within target area) is broken all bets are off as we could see a move down all the way to around 5000 over the next few months.

Add in the earnings season which starts in late July, there is potential for a lot more volatility over the next 3 months.

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Telstra Goes From Bad To Terrible As It Closes Below Long Term Support

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Telstra is Australia's largest listed Telco and has been a favorite stock to own among retail investors due to its high dividends. However its popularity has been tested over the last 12 months as the share price has gone from bad to terrible, falling from a high of $5.85 as recently as July last year to new multi year low of $4.00. 

Up until October 2015 Telstra's share price had been enjoying a multi year bullish uptrend rally. However after breaking its long term uptrend In October & November 2015, the share price experienced a steady decline lower over the last 18 months.

Why Has Telstra Recently Crashed?

Telstra has a number of challenges that it faces over the next few years as a number of earnings drivers will be drying up quite dramatically over the next 3 - 5 years. This is leading to Telstra having to find new earnings growth drivers to replace existing declining earnings streams. So far though the market is not convinced as the share price is in a long term downtrend (See article below on losing earnings drivers)

In addition to the medium to long term challenges faced by Telstra, TPG Telecom announced last week that it is buying mobile spectrum and will begin to builds its own mobile network instead of being a re seller. (See announcement below)

This announcement which was released on the 12th of April spooked Telstra investors as they dumped the stock on the day, followed with more selling over the next few trading days falling to a new multi year low of $4.00 a share.

With a few trading days left in the month of April Telstra is set to break a key long term support level of $4.50 which could lead to even lower prices over the medium to long term.

Telstra Chart Review

Monthly Chart

Telstra's monthly chart  is not providing much positive news for its shareholders as the monthly chart is set to break another key long term support level of $4.50. (As shown on the chart with the 2 circled areas) If this is to occur the most likely direction over the medium term is towards its next support level of $3.85.

Momentum Indicators Confirm Bearish View

The monthly chart momentum indicator has been in the negative since late 2015 when the share price closed below its long term uptrend. Currently its heading lower again after making an attempt over the last 12 months to move back into the positive. The Slow stochastic shows a similar pattern as it struggles to swing higher.

Volume has also been above average so far this month with the significant falls experienced in April, which is also another bearish sign for the stock, that investors have been aggressive in dumping the stock.

Currently the price has recently popped higher after reaching $4.00 last week, as it closed on Monday at $4.21, which may indicate some short term relief for the stock after significant falls.

Weekly Chart

The weekly chart provides some positive news for shareholders despite its bearish similarities to the monthly chart.

Similar to the monthly chart the weekly support level of $4.50 was clearly breached recently which is not a positive for the stock over the medium term. However after reaching within days its next support level of $4.00 a share, it appears to have respected the $4.00 support level for now. 

Last week's candle showing a long tail pointing down also indicates buyers stepping in to bid the prices highers giving some temporary relief to shareholders after falling sharply from the $4.50 levels.

Although momentum indicators are strongly in the negative supporting the bearish outlook on the weekly chart, it appears that the indicators are about to swing higher which could see the price move towards its previous support level of $4.50 over the coming weeks. However we would need confirmation of the weekly momentum indicators turning higher to support this.

If the $4.00 support level fails to hold over the next couple of weeks the next level of support is $3.75. Given that the yield on the stock is quite high now with the recent price falls and we are coming up to earnings season in July August, its unlikely that we will see the stock fall below the $3.75 support level without an earnings and or dividend downgrade in the next few months.

Daily Chart

The daily chart of Telstra has been a classic downtrend cycle for some time, with the stock reaching the extreme points of the trend on several occasions as indicated on the chart below. Given that the share price had recently fell below the trend line on the downside briefly and recovered back within its down trend indicates that the stock may be oversold and is due for a short term recovery and possibly back to $4.50 resistance.

A close above $4.50 could see the stock move towards $4.75 which is possible if investors decide to take advantage of the dividend in the coming months.

The slow stochastic on the daily chart has swung higher as it reflects the recent bounce after touching $4.00 a share. Momentum is still negative at -0.46 so caution is warranted still, especially since the stock is in a clear down trend momentum with plenty of negative sentiment surrounding the stock.

Overall the stock's bearish indicators and long term downtrend warrant the title of going from bad to terrible.  For any new investors who have taken advantage of the new lower prices may find the current dividend yields higher enough to warrant the potential risks. However existing shareholder may not share the same sentiment consider they are nursing considerable losses in the share price over the last 6  - 12 months.

Given the medium term outlook for fundamentals  from a loss of earnings from some divisions of the next few years together, as well as increased competition from TPG Telecom and a long term downtrend, it appears that the stock will continue to disappoint.

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US Stocks Bullish Run Fueled By Optimism Over Real Data

Since the election results in November US soft data (survey / optimism data) has deviated from hard data (actual US economic data). More importantly since December hard data has been falling as the economic news has deteriorated. Whilst soft data has continued to shoot higher along with a very bullish stock market. 

The Russell 2000 Index (Small Cap's) review shown below will show a very strong bullish uptrend. This pattern is quite similar to the 3 main stock indices DOW, S&P 500 and the Nasdaq. This highlights that the recent market surge in US stocks is more a function of market euphoria and optimism rather than actual improving economic activity and growth within the US economy.

Russell 2000 - RUT (Small Cap's) Chart Review

Monthly Chart

The Russell 2000 (RUT) has been in an uptrend for several years now as seen in the chart below. After a 3 year consolidation pattern of mostly sideways action between December 2013 - October 2016. The RUT index broke out of resistance of 1252 in November last year after the US election result win of Donald Trump, as all indices moved higher.

Currently the RUT has established a new uptrend within its larger long term uptrend shown with the blue line on the chart below. This uptrend started after the index gave a false signal when it closed below support of 1100 back in January 2016. After hitting the lows one month later the index has been steadily climbing.

Momentum Stalling - Consolidation Or Pullback Ahead

Since the RUT has had a strong 13 month rally in prices, the momentum indicators shown in the monthly chart are indicating exhaustion of the current rally.

I have circled both the momentum and Stochastic indicator to show that both are indicating a reversal of the strength in the market. Momentum indicator is still high however has pulled back to 2.80. The stochastic currently is sitting at a bearish cross as the blue line has crossed below the red. The last time the Stochastic had a bearish cross in July 2015 (circled on chart price action) the RUT index experienced a correction in prices for the next few months.

Since its only early March, it would be appropriate to wait for confirmation at the end of the month. If the momentum indicator is confirmed we could see the price action retrace back to the current uptrend shown in the chart at around 1315 - 1320 price range.

Since the bullish rally is quite strong its unlikely we will see a retracement back to support of 1252 - 53 level. Keep this target in mind though if we experience volatility in prices in March. Especially since the FED is likely to raise interest rates by 0.25% this month.

Weekly Chart

The weekly chart is showing a similar pattern to the monthly chart with the strong rally in prices since late November. Currently the price action is at or near the upper band of the uptrend channel shown in the chart below.

RUT experienced a strong burst in price around 5 -6 weeks ago as it made a new record high above 1400. Since then the price has been consolidating as it has struggled twice to climb back above the 1400 resistance level, with 2 weekly rejection patterns shown on chart as the price failed to stay above 1400.

Weekly momentum indicator is showing more weakness compared to the monthly momentum as it has made lower lows as it now sitting at 0.06 after reaching a high of 1.88 a number of weeks ago. This indicates the strength in the market that was present as the price made new record highs has disappeared. This explains the hesitation of the index to move higher.

The weekly stochastic indicator is also indicating exhaustion of the current rally and a consolidation or minor retracement in price is likely in the coming weeks.

The weekly chart pattern is confirming the monthly price action as the recent bullish run is running out of steam at least in the short term for now. Most likely the price action will move towards the lower uptrend channel band around 1300 - 1305 level. Based on the current bullish optimism its unlikely the price action will move towards support of 1282 - 84 level.

For confirmation of the retracement in price on the weekly chart, look for a weekly close below the 10 week moving average line which is currently at 1377 level.

Daily Chart

The daily chart price action as of last Friday's close on the 3rd of March is sitting just above its support level at 1,394. After breaking out approximately 2 weeks above the 1388 level the price action has been moving sideways and above its previous resistance level which is a bullish indication.

Contradicting the price action above the 1,388 level is that both Momentum indicators are showing a loss of strength in the market. Momentum has recently moved negative to -0.02 and the stochastic has also had a bearish cross a number of trading days ago. This means in the short term its likely we will see the RUT index close back below the 1,388 level.

If the index does close below 1,388 level, pay attention that the index stays within the previous sideways range between 1345 - 1,388. If the RUT index falls below 1,345 support level over the next 1 - 3 weeks the next target of support is 1,313.

Wildcard Event

Based on the strong bullish run of the RUT index and the major US stock indices, its unlikely we will see a retracement / fall in prices greater than 10% over the short to medium term time frame. However the FED will be meeting on the 14th & 15th of March to decide whether interest rates are rising in March. The decision will be made on the 15th. Based on prior announcements of a rate rise the market may experience with 1 - 3 days of the announcement a lot more volatility. If this was to occur we could see a mini panic of selling as the market digests the news. Therefore the wildcard this month is the FED announcement in the middle of the month that you should be weary of.

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Telstra Disappoints On Earnings Sending The Stock Below $5

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On Thursday Telstra reported a 12% drop in its half year earnings ending December 2016.  This took the market completely by surprise and the stock was savaged by investors as it fell 4.5% for the day on extremely high volume.

Telstra which is the largest market cap Telco in Australia is quite popular with retail investors and super funds because of its large dividends paid out annually. The key question going forward is whether investors will still support the stock as it struggles to grow its profits.

Today's chart review of Telstra we look at all 3 time horizons Monthly, weekly and daily charts to determine where Telstra could go next.

Disclaimer: This post is for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.

Stock Review - Telstra (TLS)

Monthly Chart

With just over half the month completed in February it appears that Telstra will close below a key support line of $5 a share. If this is to occur by the end of the month this will be quite bearish for Telstra, as the $5.00 level has previously held up on a monthly chart when the price reached or fell below these levels. Since the stock is trading below the $5 level I have labelled this level of support now as its new resistance level.

Momentum which I have circled in the chart below is currently negative and has been negative for over a year now. This indicates the weakness in the stock since Mid 2015 is confirmed by the momentum indicator as well. The monthly stochastic indicator which is another momentum indicator has also turned bearish again confirming the break of the $5 support level.

If the $5.00 a share support level has been broken and confirmed by the end of February, the next stop for Telstra is $4.50 support on the monthly chart. This new support level is another 34c away from the current price on Friday's intraday price of $4.845.

Telstra Already In Long Term Downtrend Before Profit Announcement

If you take another look at the monthly chart below you will notice that Telstra broke its long term uptrend back in October 2015. Since breaking the uptrend line the stock bounced up and down for the last 18 months, before falling below $5 a share this week.

Weekly Chart

The picture does not improve for Telstra on a weekly chart with the stock failing to move toward the $5.5 downtrend line. Instead because of yesterday's profit announcement the stock has now formed a steeper downtrend line shown along the circle on the chart. If this down trend line holds it would mean that in the short term we could see sharper declines for the stock once the stock has gone ex dividend.

I have circled the weekly stochastic indicator to show that it too has turned down from close to its peak levels. This suggests that the trend has room to move and will continue to decline lower over the medium term.

Moving Average Bearish Cross

Telstra's weekly moving averages formed a bearish cross back in September last year when the 10 week moving average closed below the 50 week moving average. Since this is a weekly chart the moving averages crossing over late last year confirms that Telstra is in a medium to long term down trend phase.

In addition the current price is sitting below both moving averages which is another bearish indicator for the stock.

Just like the monthly chart the next level of support for Telstra  on the weekly chart is $4.50. Failure to hold this level would see Telstra move towards $4 a share. Considering Telstra still has a considerable decent dividend attached to the stock, it would be unlikely to see Telstra move below the $4.50 level without a further deterioration in profits and or dividends.

Daily Chart

Gap Downs On Heavy Volume Never A Good Sign

I have circled on the chart below the big gap lower where Telstra opened at yesterday after disappointing the market expectations on profit. The volume reached just over 118 million shares traded yesterday compared to the daily average of 28 million shares. When ever you see a massive increase above average volume like Telstra achieved yesterday coupled with a big gap down, the prospects for the stock in the short to medium term are usually never positive for the price.

Days before the profit announcement you will notice the stock got close to the $5.30 resistance level but failed to reach it. This was bearish indicator for the stock even before the announcement.

Now that the stock fell sharply the daily chart moving averages have formed a bearish cross as the stock's next support level is $4.70 a share.

Similar to the monthly and weekly chart the momentum and Stochastic indicators have confirmed the bearish move lower as they both are signalling overall weakness in momentum.

Conclusion:

After looking at all 3 charts above, there is no positive or bullish indicators for the stock on any of the time horizons. With the most likely direction for the time being to continue to head lower to the next level of support. The only bright spot for the stock outside of the chart is the big dividend that now looks more appealing if the stock can sustain the dividend over time.

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Whos Winning In The Aus Large Cap Healthcare Sector CSL vs Ramsay

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CSL (CSL) Chart Review

CSL Continues Along Long Term Uptrend Towards Record Highs

CSL has experienced a phenomenal run in its share price over the last 5 years as the stock has been able to consistently grow its profits and dividends under its previous CEO who retired last year.

The stock has risen from around the $29 a share mark back in late 2011 to an all time high of around $118
last July. This equates to an approximate 300%+ return over the 5 year span outperforming the local Australian index XJO considerably over the same period.

False Break Of Up Trend

Last November and December was a nervous period for CSL shareholders as the stock had been under a succession of monthly declines after reaching the highs set in July last year. Back in November it appeared the stock had closed below its long term uptrend which was a potential signal to sell based on the chart trend lines.

December trading in CSL initially followed on from its dismal performance in November as it experienced steep losses early in the month indicating that CSL was about to confirm a clear reversal and break its up trend and support level of around $98. However a surge in buying support in the second half of December, saw the stock completely reverse its losses for the month and finish slightly higher on the month. Since it respected $98 support and its trend line it provided a strong bullish signal based on the monthly price action.

January Follow Through Buying

The bullishness continued into January for CSL as the company had made an announcement of a profit upgrade on previous estimates provided by the company. This sent the stock soaring and finished the month at $112.30 on heavy volume, which is another strong bullish sign.

Based on the strong buying support in December and January and momentum rising supporting the rally, CSL is bound to reach its previous all time highs of $118 in the short term.

Note:

Watch the price action over the coming months for a potential reversal to its $98 - $98.50 support level which would signal a break of its 5 year uptrend. This outcome though has a very low probability based on its bullish indicators and price action.

CSL Weekly Chart Review

CSL Confirms Reversal & Close Above Down Trend

The weekly chart below gives a better indication of sharp V reversal of CSL share price in December, as well as the spike in price in January shown with the most recent long blue candle.

I have circled the area where CSL had closed above the down trend. This was the first signal of a change in sentiment for the stock and direction. If you notice the volume once the reversal in trend occurred was not accompanied by an uptick in volume due to the holiday period so the move could not be relied upon for confirmation. However the volume exploded shortly after in January after the company announcement of a profit upgrade over its original estimates came out.

The recent strong performance of CSL in the last few weeks allowed it to comfortably close above the $107 support level as it now heads for its previous high and resistance of $119 a share. However a failure to hold above $107 on a weekly basis will result in CSL heading back down to the $95 level on the weekly chart.

The weekly chart technicals of CSL are very bullish, with both momentum and stochastic showing strong support for the move higher. In addition the above average volume is also supporting the bullishness of move higher. The most likely move for CSL after reaching the $119 level in the short term, is to make an attempt at a new all time high after a potential brief consolidation at resistance.

Ramsay Healthcare  (RHC) Chart Review

Ramsay Healthcare like CSL had also experienced a large move in price over the last 5 years as the stock appeared to mirror CSL's performance over the same period. Ramsay went from around $19 a share in late 2011 to a high of $84 a share reached in September last year producing an impressive 340%+ return over the period. Slightly beating CSL same time frame performance.

Ramsay Breaks Its Long Term Uptrend

Once Ramsay made the new all time high in September it begun to fall in price following a similar path that CSL had experienced in the second half of 2016. Compared to CSL which was able to respect its 5 year uptrend in December, Ramsay has continued to move lower in December and January. In doing so Ramsay has confirmed a reversal of its long term uptrend in January as it closed below its support level of $68 a share.

Next Stop $56 Support.

Based on the confirmation on the monthly chart closing price in January, Ramsay next move lower is towards a previously strong support level of around $56 a share. Initially over the coming weeks and months. We may see the price move towards its previous support level of $68 though in the short term before it moves lower to its next support level.

Note:

Just like CSL if Ramsay was able to receive some material positive news on the company in the interim we could see the stock reverse the close below its uptrend and support level of $68. If this was to occur a close above its previous long term uptrend on a monthly basis would confirm the move.

Apart from any material news from the company, based on the chart technicals and momentum trending down the performance of Ramsay in 2017 will be weak.

Weekly Chart Review

The weekly chart for Ramsay does not provide much change in sentiment and analysis compared to the monthly chart. I have circled the key pivot points for Ramsay recently and resulted shift in trend as a consequence.

The stochastic indicator though is showing a divergence to the direction of the price action, however since its a lagging indicator provided the price continues to fall lower the stochastic indicator will reverse in line with the trend.

If the price in short term was to close above $68.50 on a weekly chart we could see a potential test of the $81.30 resistance level. A move that based on the price and momentum indicator trending down on the weekly chart is unlikely to occur.

The Final Verdict

After reviewing both large cap healthcare stocks recent price action on a monthly and weekly basis, its clear that CSL is clear favorite to outperform in 2017 over Ramsay Healthcare. If CSL's management had not increased its profit estimate last month, CSL could have easily found itself mirroring the sentiment and direction of Ramsay.

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Disclaimer: This post was for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.

Suncorp Group (SUN) Chart Review - Monthly Chart
NB: Charts prepared before the close of 19/12/16.

Suncorp Group shareholders have something to cheer about this Christmas in 2016, after several years of slow declining prices Suncorp Group looks set to finally close above its 2year downtrend.

For this chart review I have pulled the data over a much longer period than usual (Hence chart appearing condensed) to give you a good overview of the performance of this stock since 2007, together with some longer term resistance levels.

The first initial thoughts are that you will notice that the stock has still not recovered from its 2007 highs around the $19 a share range. On the positive side after collapsing in 2008 and 2009 to a low of around $4 a share, the stock like the overall Australian stock market has made a strong recovery albeit not at new all-time highs at $13.47.

Supporting Long Term Trend

Suncorp is showing a strong and healthy uptrend since making the lows in 2009. You can see there were a few unsuccessful attempts to close below the uptrend only to recover during the month.

After a few years of a consolidation within the bigger 9 year uptrend, Suncorp appears to be making a breakout higher with its first close above its 2 year downtrend. (See circled area on chart)

The first level of resistance for Suncorp now after breaking past $13 level this month is $14.60 resistance. With the strong momentum this month and usual bullish tendency of December trading month there is a good chance Suncorp may reach the $14.60 area with only a few weeks left in the month.

Since its the 19th of December with a little under 2 weeks to go, there is a potential possibility that Suncorp retreats and falls back within the downtrend line. Given the bullishness of both the US and Australian markets this month this scenario is only a remote possibility.

Lastly having shown a longer period for this monthly chart you can see that there are still several levels of resistance for Suncorp to clear before reaching its previous all time highs. After the near term resistance of $14.60 there is $16.00 a share as well $19 a share to reach before it can begin to attempt new all-time highs. 

Weekly Chart

The Drought Has Ended

Three weeks ago Suncorp was able to finally break its long term down trend on the weekly chart with a confirmed close above its downtrend. (See circled area below)

Prior to the break out Suncorp had been experiencing a long term downtrend since late 2014, as the stock failed to make higher highs. After reaching the lows of the year at $10.11 in February the stock has been able to make a staged recovery.

With momentum rising for several weeks, the move higher over the last 6 or so weeks has been well supported by strong momentum indicating strength behind the rally higher.

Suncorp is now fast approaching its next level of resistance at $13.70 with around 20c to go before reaching the level. The stock make initially struggle at this level as the previous two attempts failing to move higher. Therefore the $13.70 level is a critical price point for Suncorp over the last few weeks of the year. A failure to close above the next resistance level could see the stock fall back to $12.85 level of support.

Daily Chart

Trump Effect

Since the day of the US election when the news of Trump winning shocked the markets into freefall temporarily, Suncorp has been able to enjoy a spectacular move higher for a alrge cap stock. After closing at $11.47 on the 9th of November the stock has rallied $2 a share or over 17% in a 6 week period.

Due to the fact that the rally has been so strong the daily chart uptrend is quite steep. (See chart below) The reason why I'm mentioning the steepness of the trend is because the steeper the move of a trend the shorter the trend normally lasts. This is because buyers quickly disappear with such a large move forcing the price to fall violently on most occasions.

Warning:

I suggest to wait for a retracement / pullback in price before considering this stock due to the very strong run up over a short period. I have drawn in the uptrend line to carefully watch for a reversal to occur.

Given that volume has also been above average which is a very bullish sign, Suncorp most likely will reach the $13.80 resistance level first before experiencing a pullback in price.

Overall Suncorp looks very bullish on all 3 time horizon charts following the big banks higher in the month of December. I have indicated the resistance and support levels to watch out for over the next couple of weeks.

Lastly be mindful of any sharp increases in volatility over the holiday period we are entering into now with low volume over the holidays the markets can move erratically.

Back in the last week of December last year and the first week of January 2016 the markets had the worse start of the year, after the FED raised interest rates in December 2015, just like they have in 2016.

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Disclaimer: This post was for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.

Domino Pizza (DMP) Chart Review

NB: The charts shown in this review were taken prior to the close of trade on the 7/12/16.

Domino Pizza is one of those stocks that if you never owned it wish you did. It has become one of those amazing success stories, where you can start off as a small company with a big vision and grow into a multi-billion dollar company.

Domino Pizza has become a fast growing company with consecutive years of strong profit growth that now spans multiple countries. Due to its amazing growth the stock has gone from below $10 a share only a few years ago, to a stock that reached over $80 a share in August this year.

Has The Dream Run Ended?

Observing the monthly chart below of Domino Pizza, it would appear the stock looks to be in trouble as it's in the process of breaking its second uptrend. If you take a closer look at the chart below, you will notice that Domino's had previously accelerated its price growth on 2 occasions from its original long term uptrend. (See chart trend lines below) Currently in December it appears that the stock is slowing down considerably as it heads back to its original long term uptrend that began in 2013. (See chart)

Although Domino's would be considered to be in a very strong uptrend based on its long term history. The current price action suggests that if Domino's was to trend towards its original long term uptrend, the stock has a long way to fall before it reaches its destination.

The nearest support line to watch out for Domino's on the monthly chart is at the $63.90 level. If the stock closes below the support level on a monthly chart, it will confirm the break of its second uptrend, with little support for the stock to head lower.

I have circled momentum on the chart to highlight that even though it's still positive at 7.30 it has fallen considerably from the highs as it heads toward zero momentum.

Since its still early in December it would be appropriate to take a wait and see approach towards the end of the month. NB: Global and Aussie stock markets are quite bullish presently heading into the Christmas rally, so to see Domino's weak in this environment doesn't bode well for the stock.

Weekly Chart - Key Levels To Watch

The weekly chart shows the stock is at a current key level in terms of trend and support levels. If Domino Pizza were to close below the $64.40 level by Friday's close it would confirm the break of the long term weekly trend as well support. This would be an extremely bearish sign for the weekly chart.

Provided we close below the nearest support, the next step for Domino's is $60.50. With momentum at negative 7.67 and heading lower the probability of break of trend on the weekly chart is high.

If buyers were to step in by the end of the week and hold support of $64.40, look for the stock to move towards resistance level of $70.30 and make another attempt to close above this level.

Daily Chart - Multiple Bearish Indicators

Domino's Pizza on a daily chart is at a critical price level, as the stock approaches support of $63.85.

Currently the price is below the 10, 50 & 200 day moving average suggesting the stock is under heavy selling pressure. Many traders and investors use the 200 day moving average as a key indicator for a stocks trend.

Momentum is negative 5.05 and falling, showing the selling strength is accelerating and supporting the price lower from here.

As previously mentioned since the stock is weak in an overall bullish environment for Aussie stocks, suggests that the stock is no longer popular to own for its potential share price growth prospects in the short to medium term.

Potential Death Cross

Watch the support level of $63.85 over the next few trading days for this stock, because if the stock continues to fall from these levels it will pull the 10 & 50 day moving average below the 200 day moving average. If this occurs it would form what traders call a 'death cross' which ultimately confirms that the stock is in a downward cycle in price.

Overall the stock appears quite bearish on all 3 charts presented, even though the stock is still comfortably above it long term trend on the monthly chart. Over the longer term the stock could resume its upward trend and respect its longer term trend, however over the next weeks and months may continue to struggle relative to the performance of the ASX market.

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Disclaimer: This post was for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.