|
One subscriber asked if I would do a similar review of BHP as I did for oil last week. And on that point if you have a matter that you would like reviewed, by all means send an email to me and if we think it will be of interest to our board readership I will be happy to provide some insight. Bearing in mind our readership is now very international – as is BHP!
The BHP request was at a very interesting time when BHP was shooting up like there was no tomorrow and many readers were asking themselves ‘when can I get on board’? It can be tough when you see stocks leap forward and you have taken a cautious stance and sold out! Don’t worry we have all done it at some time!
Let’s look at the chart – but firstly for May 19 the day Harry – a SharesBulletin subscriber – sent in his question:
Chart 1
click chart for more detail
You can see there was nothing stopping BHP – China take over rumours rife, iron ore, copper, oil, gold prices going through the roof and media headlines egging all of us on. All news was good news.
But catapult a week forward and BHP is off by over 5% for the week at the time of writing. You have to ask who was buying and why were they buying on Monday and who bought at $50 on Friday. What were they smoking?
When you feel like you have missed the boat and you feel you must jump in then remember what Uncle Tom always says – yes you guessed it: ‘markets always pull back’.
Harry wanted the same chart as we did for oil last week and so here it is Harry:
Chart 1
click chart for more detail
Yes a similar pattern although that does not mean BHP and oil will dance together to the same ditty but there is a fair chance they will be in the same groovy club.
Also we should also remind ourselves that in any retreat we also see relief rallies and so it is unlikely to be straight down!
Forgive me Harry as I have embellished the above chart just a little by throwing on the oscillator as I thought it was interesting – note the divergence.
However BHP will be well supported I expect a retreat to around $40-42.
Do you know you can get this and more each week in SharesBulletin - www.sharesbulletin.com.au. Can I be forgiven for a little plug? You well know the market is down by almost 8% for the year whilst the SharesBulletin Portfolio has outperformed the market by over 13%. And since inception the SharesBulletin Port has outperformed by over 75%. That is not good luck.
So if you are a little confused about the market and about what to do, give yourself a treat and take out a subscription for at least one year – until we’re out of the woods.
Apologies – only intended a small reference to SB not a full blown but as per usual – I just got excited and a little carried away.
Enjoy the ride
Tom Scollon
Chief Analyst
|