I have been looking at the charts for BHP, RIO & Fortescue. BHP & RIO are not jumping out as a buy. BHP& RIO are slipping sideways for now suggesting uncertainty – waiting for direction. Fortescue has hit a double top and the price came back to retest the resistance and on Friday came back to close with a spinning top suggesting uncertainty. Before I would be looking at AQA as a buy I would want to be seeing a buy in these stocks as well.
Looking at the monthly chart this stock has been bullish since Oct 2004 and the indicators are suggesting a continuation of trend. Note the size of the recent candles which suggests to me caution.
It did suffer a price pullback when the market began its decline due to the sub prime end of Dec and into Jan, proving the price can be affected by the overall market trend. The price has since recovered to form a double top at resistance. I would expect to see some pull back in price.
Personally, I would wait for a break of the double top with volume particularly with the price being in blue sky - unknown territory. There is no back history at this price level to measure possible future performance, and in the present market environment this would worry me somewhat. What if one or two of the major U.S. financial institutions loose their triple AAA rating, or even worse still some banks go into bankruptcy as has been suggested by one or two analysts as a real possibility. What further impact would this have on the global economy, and how would this affect stocks such as AQA?
I doubt the market is done with all the bad news – I suspect further declines now the DOW has broken support at 12,000. It appears the short-term accumulation, that has been taking place over the last several weeks, has come to an end and the long-term selling pressure will once again prevail. This will no doubt have a further negative impact on the Aussie market. Even so there are always stocks that will go against the trend and it is possible AQA may be one of those stocks, although as earlier stated AQA was affected by the pull back in Dec / Jan.
With the overall trend of the market continuing to be bearish I personally would be waiting for the indicators (such as higher highs and higher lows with increasing volume, suggesting the Institutions are buying) to tell me the market is showing signs of turning bullish which could be 12 months or more away. This is where the smart money will pick up stocks with solid fundamentals on the cheap.
Sorry about the cold water…. This is as I see the markets for now
Regards
Drafthorse
AQA Price at posting:
0.0¢ Sentiment: Sell Disclosure: Not Held
