Technical update: 11 May 2018

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
11 May 2018, 10:48 AM

Sydney Airport (SYD) – target reached

In our last update on January 11, 2018 we discussed the likelihood of the price declining further in the short term and recommended clients accumulate the stock around $6.70. The price experienced a very strong rebound over the past two weeks and our price target of $7.30 has been reached on Wednesday. The RSI indicator has completed a failure swing point from overbought levels, which suggests that the short term upside from here is likely to be limited (if any) and that the price is vulnerable to a short term pull back.

The potential downside price target is $6.90.

Adairs (ADH) – target reached

In our last update on March 22, 2018 we discussed the oversold nature of the stock and opened a tactical buy at $1.96. The price bounced strongly over the past two weeks and our upside price target of $2.20 has now been reached. Over the long term we continue to like to stock and we see a probability of the price rebounding to $2.49.

In the short term the stock is overbought and close to resistance, therefore we close our tactical buy.

QUBE Holdings (QUB) – target reached

In our last update on March 29, 2018 we discussed the oversold nature of the stock and recommended clients accumulate between $2.04 and $2.15. The price declined to $2.13 and has provided a great buying opportunity. A strong rally has unfolded over the past two weeks and our initial upside price target of $2.40 has now been reached.

While the stock is overbought on a short term basis and the price may pull back, over the medium term we see a possibility of the price rebounding to $2.50.

SEEK (SEK) – approaching resistance

SEEK has been trading in an up trend over the past year which is still technically intact. The current price action is approaching its all-time high of $21.29 where initial selling pressure is likely to arise. The RSI and the MACD indicators have approached overbought territory suggesting that the stock is vulnerable to a short term pull back.

Although at this point there is no sign of reversal of the up trend, given the proximity to resistance and the overbought momentum conditions we are of the view that the near term upside from here is likely to be limited.

Tabcorp Holdings (TAH) – tactical buy

The down trend from the December 2017 high has clearly lost momentum over the past month and the price appears to be in the process of building a small base. The medium term down trend line has been broken upwards recently, suggesting that the bears are running out of steam. Bullish divergences between the price, the RSI and the MACD indicators have formed over the past few months, suggesting that the price is likely to bounce in the near term. A higher low appears to be forming on the daily chart, adding further confidence that the price might be at a turning point.

Given the proximity to key support of $3.90 and the improvement in the price structure and the momentum conditions, we are comfortable accumulating the stock at current prices. The first potential upside price target is $4.80.

More information

Morgans clients can login to view all recent technical analysis on companies we cover by browsing the research section and filtering by 'technical analysis' in the Market Updates section. If you are interested in finding out more, please contact your nearest Morgans office.

Disclaimer(s): Analyst may own shares in some or all of the companies mentioned.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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