anz and the fat lady, page-4

interesting commentary

Despite mining stocks retreating on Tuesday as a result, the Australian share market still managed to post a new record high as buyers flocked into banks and industrials instead. But here's another interesting observation: out of the five major local banks three are currently trading above their respective average price targets, while ANZ ((ANZ)) shares are at their average twelve month target. This leaves only National Australia Bank ((NAB)) with less than 4% left between share price and average price target of $43.13.

Historically, when local banking stocks surge past their average price targets this indicates further upside is limited and a share market retreat soon follows. So far, we haven't noticed one single occasion over the past five years when this hasn't happened.

The situation is similar for those resources and energy stocks that have been the major drivers behind the recent record run for the local share market: Woodside Petroleum ((WPL)) shares are more than 6% above their average price target of $48.53, BHP Billiton ((BHP)) shares are also above their average target of $44.44, but shares of Rio Tinto ((RIO)) are still some 6% off their target.