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A quick look at 52 week high and low stock prices: February 2010

February 10th, 2010 · Greg Atkinson · 13 Comments

It has been a while since I have looked at the 52 week prices for some widely held ASX stocks, but now that the stock market has taken a bit of a tumble over the last week or so it seems like a pretty good time to have a look at them again. Have stocks hit new lows or have we simply seen some heat taken out of the market?

Last time I reviewed the 52 week stock prices was back in October 2009 and at that time I made the following comment:

“……if the RBA raise rates again in November then stocks could easily slide well below 4500.”

As we know now the RBA did raise rates in November and the ASX All Ords dipped below 4500 earlier this week. So I do actually get some calls right from time to time.

I am no market genius, but it was pretty obvious if people looked at the trade data and global economic situation in late 2009 that the Australian stock market had rallied too far.

But a stock market correction is nothing to get worked up about unless you are seeking to write a catchy headline for a newspaper. So rather than get caught up in the correction hype let’s calmly have a look and see what some stocks have been doing since October.

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A closing price in green means the stock is trading higher than last time a check of 52 week stock prices was undertaken. A closing price in red means the stock price has fallen over the same period.

The data above highlights fairly well I think how the market has come back down to a level we saw around October last year, which in my view is a good thing. It is better to have some profits taken out of stocks at regular intervals than for the stock market to become over-bought and come crashing down on some rumour.

We can also see how the banks and financials have been hit a little harder than other sectors, mainly because they probably rallied a little too far and also because there are a lot of issues still swirling around that impact them such a regulation, interest rate & some lingering concerns regarding the health of the global financial system.

The data also shows how defensive stocks like Woolworths, Dominos and Telstra tend to hold up better during corrections and the fact that they are doing this, makes me feel a little better about the overall health of the stock market.

Back in the dark days of 2008/early 2009 even defensive stocks were getting hit hard and that is a good indication that panic has gripped the market. We may have seen a correction over the last week or so and even a little panic, but it has not been anything like some of the wild sell-offs we had during the worst of the global financial crisis.

When I look at the 52 week stock price data above I have to say I am relieved. Yes some stocks like Australand (ALZ) are still way below their 2007 levels, but generally speaking all stocks in the table are well clear of their 52 weeks lows and this is a good sign.

The mining companies, (BHP and RIO) despite the recent pull-back in their share prices, are still higher than they were in October due to the solid demand for commodities. But as I have said on previous occasions, I can’t see this demand being sustained.

We need to remember that an enormous amount of money has been pumped into the global economy and this has supported the demand for commodities such as as new road, bridges and dare I say it, school halls are constructed across the world.

But very soon, just about every nation except perhaps China, is going to have to wind back the government stimulus spending or risk having a serious debt problem. When that starts to happen I would expect the revenue rolling into companies like BHP & RIO will be cut significantly.

So my outlook for the next 3 months is that the market will get back up to the 4800-5200 level and will not rally much past that point until the outlook for 2011 improves.

This means I certainly don’t expect we will see the stock market go anywhere near the lows of March 2009 in 2010, but I am also pretty sure there is another correction or two waiting for us this year. Investors are still a very nervous lot!


13 responses so far ↓

  • 1 Anon // Feb 12, 2010 at 7:56 pm

    “Feb. 12 (Bloomberg) — China ordered banks to set aside more deposits as reserves for the second time in a month to cool the fastest-growing major economy after loan growth accelerated and property prices surged.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=af8bbtmHLfbQ&pos=1

  • 2 Greg Atkinson // Feb 12, 2010 at 8:34 pm

    Yes Anon it looks like the Chinese officials are worried about their economy getting overheated. Actually the property market in China is pretty scary if you believe what some people have been saying on sites like Bloomberg..one can only guess what the fallout would be from a short drop in prices there.

  • 3 Anon // Feb 17, 2010 at 6:53 pm

    China is dumping US treasuries. Interesting developments.

  • 4 Anon // Feb 17, 2010 at 7:09 pm

    Greg I was looking into Japanese banks recently, looks (superficially) to have good longterm value. How is the financial sector over there, any recovery ?

    Remember above not advice, just commentary.

  • 5 Greg Atkinson // Feb 17, 2010 at 7:23 pm

    Anon I think most of the damage done to the Japanese banks was caused by their exposure to the U.S and Europe (and Dubai of course!) However the Japanese financial sector is still a bit of a mystery to me so I tend to steer clear of making investments in that sector.

  • 6 Anon // Feb 17, 2010 at 8:42 pm

    Thanks Greg.

  • 7 Anon // Feb 19, 2010 at 7:36 pm

    Thought this might interest some of you — talks about problems with China, USD, US consumer/debt — very bearish but his arguments are persuasive.

    Paolo Pellegrini’s PSQR Capital Annual Letter:
    http://www.marketfolly.com/2010/02/paolo-pellegrinis-psqr-capital-annual.html

    Remember above not advice, just commentary — please seek a financial adviser for info/decisions/advice.

  • 8 Anon // Feb 21, 2010 at 1:32 am

    Still in bullrun, but later stages. Switch to higher quality stocks expected:

    “So while this bull market has longer to run, since it began in March, the ride might not last much longer. “We could be getting into the last third of the bull market,” said Ed Clissold, senior global analyst at Ned Davis Research.

    The firm doesn’t see January’s decline as a sign of an imminent end to the bull market partly because it hasn’t seen excesses of investor optimism or narrowing of broad market gains, which usually precede a bull market’s end. But the firm is warning of a more-serious setback—and —possibly the end of the bull market-some time in the spring or summer. It recently published a study showing that market declines of more than 10% are common in the six to 18 months following a recession’s end.

    One sign to watch for is what analysts call a rotation away from lower-quality stocks. Those are small stocks and battered companies such as banks that have led the recent gains. As a bull market matures, investors look for bigger, safer-seeming stocks with steadier earnings.”

    Low inflation good for stock returns historically:

    “Another bullish signal is that stocks do well when inflation is low. Davis presented data showing that stocks gained 18.1% when inflation was under 1%, 8.7% when inflation was 1% to 4%, 1.2% when inflation was 4% to 9%, and 0.7% when inflation was over 9%. His data reach back to 1947, and thus do not include the deflationary periods during the Depression, which many claim closely resemble today’s environment. ”

    https://www.ndr.com/

    Above and all posts not advice, just discussion — seek financial advice/info/decisions from a financial adviser

  • 9 Greg Atkinson // Feb 21, 2010 at 11:37 am

    My own “gut” feeling is that we have bounced off the oversold positions back in March 2009 and that the bounce rally faded out around Sep-Nov last year.

    Now investors are looking for signs of a return to growth and it just isn’t there yet. We are still in the Twilight Zone and I can’t see us getting out of this for maybe six months.

    People seem to get away with reports of companies announcing an increase in profits, but these “increases” are simply an improvement from very poor results over the last couple of years. Most major companies from what I can tell are reporting profits much lower than those in 2007/2008 so it isn’t anything to get excited about yet.

    The signs I am watching are mainly trade figures, the BDI and commodities prices.

  • 10 Anon // Feb 21, 2010 at 12:36 pm

    “People seem to get away with reports of companies announcing an increase in profits, but these “increases” are simply an improvement from very poor results over the last couple of years.”

    Yep, the cyclicals have not been showing good numbers from what I’ve seen. Alcoa’s numbers were poor. The less cyclical large multinationals are basically cost cutting and getting more efficiencies — with flat/slightly higher sales figures (e.g. Walmart, Sanofi)
    BDI looks like its rebounding…but its a bloody roller coaster. I’m reluctant to make calls on its direction !
    My technical systems were triggering bullish signals soon after the recent lows and are signaling new highs soon. Although you can never rely on these things; as soon as you do you’re dead.

    If inflation keeps low and the economy mopes along without too much steam, US banks will do well. Thats a good environment for loan losses to drop and less provisioning.
    I’m not so sure about Aussie banks. TBH I have no idea how toxic their loan books are until house prices fall meaningfully (and who knows when or if that will occur?)

    We could just stay in this “twilight” zone as you say for several months. Statistically the SnP 500 only trends 15% of the time. 85% of the time it just goes sideways.

    Above and all posts not advice, just discussion — seek financial advice/info/decisions from a financial adviser

  • 11 Anon // Feb 21, 2010 at 1:30 pm

    Analyst estimates for Large US Financials:

    Bank of America
    http://www.valueline.com/dow30/f6291.pdf

    JPMorgan Chase
    http://www.valueline.com/dow30/f1899.pdf

    Above and all posts not advice, just discussion — seek financial advice/info/decisions from a financial adviser

  • 12 Greg Atkinson // Feb 22, 2010 at 8:33 am

    Anon thanks for the links. As for the ASX All Ords & S&P/ASX 200 I feel pretty confident they will move into the 4800-5200 range once more but be unable to break out of that range for some time. I have been talking about that range since last year and so far the market has done pretty much what I expected..for once!

    I still reckon the Australia stock market will hit around 5500 by September this year as I expect we will either have some good news regarding the global economy by then or I will be horribly wrong and stocks will be back down near 4000.

    But I think we can safely say that the recent correct was just that, a correction and not some plunge back down to new lows as the panic merchants were gleefully predicting about a week ago.

  • 13 Anon // Feb 22, 2010 at 2:18 pm

    “But I think we can safely say that the recent correct was just that, a correction and not some plunge back down to new lows as the panic merchants were gleefully predicting about a week ago.”

    Yes they only comeout when we go down, and when we go up they are nowhere to be found 😉

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