Woolworths to rally

by Michael Gable

Woolworths peaked at the end of April and has now made a 3 wave countertrend move, dropping about 9%. WOW is between the support levels of $36 and $35 but we have noticed that it has now provided a buy signal on the RSI (circled). Often when WOW does this, it goes on to trade higher. Also circled are the other two occasions in the last 18 months that it has done this. The last time this happened I covered it here on Stock Watch in January (http://www.finnewsnetwork.com.au/archives/finance_news_network25655). WOW went on to trade much higher. Therefore there is a high probability that this is another low for WOW and it should now trade higher from here. Apart from buying stock, one alternative strategy is to sell longer dated put options from this price level. Similar to my options strategy on BHP that I spoke about here last week that is now doing well (http://www.finnewsnetwork.com.au/BrokerCommentry/926/My-options-strategy-for-BHP).


Disclaimer: Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities 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.

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