Take Advantage Of Terror
Sun Herald
Sunday October 15, 2000
THE sharemarket's October terrors are upon us. Hooray!
Get ready to scoop up some very cheap stocks. And while you are at it, Coles Myer looks like it's in an upswing and Woolworths is booming. And if you are locked in with some high-priced stocks, don't sell.
As today's All Ordinaries chart shows, the index is in a rising channel and all will be safe unless there is a high-volume plunge below 3000.
It all means the market trend since last October is up in the medium term but looking down in the short term for the past eight weeks.
I think the market is still in its year-long bull trend where buying on the dips could be very profitable.
Interestingly, the falls in the local market have mostly been on the opening, with the index levelling out right up to the close of play instead of being steadily sold off during the day, suggesting the buyers are bargaining.
There is a rising wedge formation between quite defined support and resistance lines. The overhead resistance line is better because it rests on three peaks, whereas the lower support line is only on two troughs.
Chart lines drawn on three points are always better than those drawn across two. Four is better still.
Now the big question is will the falling Ords bounce off the lower support line if it gets down that far.
So far the bullish stance is back up by a rising advance/decline line, although it must be said that by week's end it was beginning to lose its upward thrust.
The Ords' sogginess has wiped the floor with recent chartbusters. Last week's favourite, Gold Cross, rose, fell back and then stopped trading completely as the market ran scared.
So it will be interesting to watch this week's chartbusters Masmindo, Gocorp, Wavecom and Indian Mining.
Elsewhere, News Corp is already scared, dropping from $26 to $21 in nine trading sessions. The stock's failure to rise above March's $28 high has a few traders spooked.
Optus has now broken below May's $4 low with a falling 34-day moving average showing no signs of any relief.
Telstra, at $6, looks a bit tired with the long-term 200-day moving average pointing downwards.
Coles Myer is in a new upswing. It slid from $9 in August last year to bottom at $6 in May this year. Woolworths, on the other hand, is screaming upwards $4.70 in February, $7.40 last week.
* For a free set of sharemarket charts by Garry Jones, send a stamped, selfaddressed envelope to Chartist, The SunHerald, GPO Box 506, Sydney 2001. These are Mr Jones's views and investors should seek their own advice.
MSD: Masmindo is about to make a classic break-out after a long accumulation period in which some knowledgeable money has quietly got set. The accumulation followed the great sell-off from 30? to 10?, an unnerving experience.
GOC: Gocorp, first listed in June, is back in favour with buyers after falling from 26? to 9? inside two months. The price has broken up through the 34-day moving average, a signal which will bring aboard some new bulls looking for a 50 per cent retracement.
WAV: Wavecom is making a second break-out of a serious overhead resistance line. The first one in May fell apart after a 5? jump. The latest breakthrough has led to another 5? jump. Traders will look for a move into the 30? area and then a break past 35?.
INM: Indian Mining is looking for a break-out of its sideways triangle. Trading around 3.5?, the price might try for an upwards break-out, an action which will bring in more buying if it does occur. Watch it daily for a move higher. Some traders would be buying on the dips.
© 2000 Sun Herald