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Blog

Technical update: 21 May 2018

Violeta Todorova

Apollo Tourism & Leisure (ATL) – building a base

ATL has been trading in a correction mode since February 2018 which now appears to be losing downside momentum. While at this point there is no sign that the secondary down trend is reversing direction, we are encouraged by the formation of a higher low, which usually signals that buying interest is arising. Another positive development is the formation of a bullish divergence between the price and the MACD indicator and we are comfortable accumulating the stock at current price levels.

The first potential upside price target is $1.70, however levels towards $1.85 to $1.90 are achievable over the medium term.

Insurance Australia Group (IAG) – overbought

IAG has been trading in a strong up trend over the past two years which remains technically intact. The weekly and daily RSI and MACD indicators have reached overbought territory suggesting that the secondary up trend is likely to take a breather and that the short term up swing is likely to reverse course soon.

The potential short term downside price target is $7.90.

Inghams (ING) – close to resistance

ING has been trading in an up swing over the past month which appears to be losing momentum over the past week. The RSI and the MACD indicators are close to overbought territory suggesting that the price is vulnerable to a short term pull back. 

Given the proximity to key resistance and the overbought momentum conditions we are of the view that the near term upside from here is likely to be limited.

Link Administration Holdings (LNK) – ouch

In our last update on March 29, 2018 we discussed the oversold nature of the stock and the likelihood of the price bouncing in the short term and recommended clients accumulate around $8.43. While the price did bounce the rally was arrested $0.25 below our price target of $9.00. Over the past two weeks significant damage has been done to the chart with the stock experiencing a sharp sell off and declining to its key support of $6.68. The decline has clearly lost momentum over the past week and we are of the view that the price will trade sideways and build a base in the months ahead.

The potential upside price target over the medium term is $7.90.

Super Retail Group (SUL) – target reached

In our update on March 16, 2018 we discussed the oversold momentum conditions and the likelihood of the price trading higher in the near term. A strong rally has unfolded over the past two months and our last upside price target of $8.09 has now been reached. While at this point there is no signal that the rally is over yet, given the proximity to key resistance of $9.12 and the overbought momentum conditions, we are of the view that the near term upside from here is likely to be limited and that the stock is vulnerable to a short term pull back.

The price rallied 22% since our update and active traders might consider trimming positions.

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.