Finding an entry point with CBA

Stock Watch

Fairmont Equities managing director Michael Gable takes a technical look Commonwealth Bank of Australia, Newcrest Mining, Asaleo Care and Redflex Holdings.

Good morning. I'm Michael Gable from Fairmont Equities, and this is Stockwatch for the Finance News Network on Monday 30 September. If you have requests, send it through. Any advices is general only, so please consult your finance professional before acting on any advice given here today.

This is a weekly chart of the Commonwealth Bank of Australia (ASX:CBA). Fairly interesting in terms of the way it's trading. I know it's a stock that many investors are looking to get into, especially given that you can't receive much interest by having the money sitting in a bank account, and CBA obviously has a fairly attractive yield. But what I've noticed over the last several weeks is we obviously had this nice movement up a few months ago in CBA before pulling back, making a lower high, and then it got sold off sharply, of course, with the rest of the market, but then it bounced back fairly strongly. What's interesting about it is that we've made another lower high. With a diagonal line here we could see that it is failing to really kick on.

So I think in the short term we might see weakness for CBA. Basically, with this sort of V-shaped recovery, you often get a bit of a retest of this low, usually a higher low. So despite it falling sharply and then bouncing pretty sharply, it probably needs to use a bit more time, and I'd be looking at support around $78. $78 seems to be a strong support level, and I think it'll look good for the CBA share chart if after this sort of movement, we get an easing back towards $78, and then I think it'll be ready to rally again. At the moment, just looking a bit weak because of those lower highs, but I do expect support to come in around $78.

Moving on, Newcrest Mining (ASX:NCM). This is one I've covered a few times since the beginning of the year. For those who recall, we were looking at the breakout back in January, and I've been happy to hold it ever since. Having said that, a lot of our clients have taken profits up here, but generally what we're seeing here is the formation of a flag. So we've got obviously the big run up here, and at the moment, share prices consolidating.

At the moment, in terms of the next few days or so, I'd be looking at support to come in towards $33, and then it should reverse off there. Otherwise, if it breaks that, obviously that's a negative. So at the moment, I guess the overall chart's fairly neutral. If you're in it, I'd be happy to hold on. If you're looking to buy back in, I'd be waiting to see if we can get some support around $33.

Moving on to some viewer requests. The first one, Asaleo Care (ASX:AHY). Not really too much happening on this chart. We've had this sort of sideways movement since the beginning of the year. There's obvious resistance here, which it rejected from. Tried to rally again. And on this weekly chart we could see, once again, a bit of price rejection. At the moment it looks like it's going to head sideways. If it cracks resistance we're looking at the next resistance level to kick in just above a $1.20. So not really much sort of upside there if you're buying it on the breakout, but look, at the moment it's a fairly neutral looking chart.

The other viewer request is Redflex Holdings (ASX:RDF). I've had to move to a weekly chart with this one. It's fairly liquid on a day-by-day basis. I don't really have much to add, to be honest. Things that stood out for me were volume. So over the last couple of years, every time it had a bit of a rally, there was volume, which is a positive. So we could see these sort of spikes in volume every time it does rally, but unfortunately it just hasn't made any progress. We've seen that happen yet again. But I think until it sort of can pop through and make a higher high, we may well see the selling come back in and RDF continue to trade in a range. At the moment, we need to see that higher high, but at least it's a positive that volume is coming in every time it does try to rally.

That's it for this week. If you have a request, send it through. Thanks.