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A quick look at 52 week high and low stock prices: October 2009

October 29th, 2009 · Greg Atkinson · 10 Comments

Now that it appears we are in the midst of the long awaited stock market correction it seems an ideal time to check how the 52 week stock prices have been tracking for a number of ASX listed stocks as this may tell us if the rally of the last 7 months is running out of steam.

Over the last few months I have been suggesting that the ASX All Ords/ASX 200 would rally up to around 4800-5000 fairly easily but then find it tough going to rally much past this level. My rationale is simply that around 4800-5000 is a fair place for the Australian stock market to trade in a recession like economy and also unlike just about everyone else it seems, I do not believe that the Australian economy has yet felt the worst of the global financial crisis.

I am also on the record as saying the Reserve Bank of Australia would raise rates to early and I believe the recent rate rise was a mistake. If the Reserve Bank raise rates again this year then they should be looking for other jobs.

The RBA were caught out in 2008 by the global financial crisis and were raising rates at the wrong time, now they are out of sync once again with the global economy and have gone too early in raising rates.

Finally, although I am positive about stocks over the long term I have been cautious now for some months as I believe the market has rallied a little too quickly too fast. The U.S. and E.U. economies are still fragile, the Japanese economy is struggling to recover from the collapse in export volumes and over in China we can only hope that growth can be maintained there for the next year or so.

But enough of my ranting, let’s have a look at some hard data and see what some Australian listed stock prices have been doing over the last year.

52 Week Stock Prices Highs/Lows

(Last trade/closing prices as of 28th October 2009)

[table “3” not found /]

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. Rio Tinto has just been added to the list so the last price is shown in black.

With the notable exception of Telstra all of the stocks above have seen their share prices rise since the last time I look at their 52 week high/low stock data. (in July)

The reason Telstra shares have struggled is due to issues surrounding the NBN (National Broadband Network) and Comrade Conroy’s plans to forcibly break the company up so he can establish his own government run monopoly to roll-out out a broadband network. (hopefully sometime this century)

However the data also shows that all the stocks are now below their 52 week highs and it looks like today that they will all fall further below these levels.

What this suggests to me is that the recent strong rally has run out of steam and that the correction I have suggested would come around sooner or later is now under-way. If the RBA raise rates again in November then stocks could easily slide well below 4500.

Looking back now we can see how brave investors could have made a tidy sum on moving into Macquarie Group (MQG) shares when they were under $20 and also how a defensive stock like Woolworths (WOW) has traded in a fairly narrow range amongst the chaos as is characteristic of this type of stock. Mind you plenty of other defensive stocks have been hit hard in recent times so heading for defensive plays has not necessarily been a good strategy over the least few years.

At this stage I honestly have no clear idea where stocks will be in a few months. By September 2010 I expect the All Ords/ASX 200 to be up around 5500 but my feeling now is that the rally since March will be halted for some time by profit taking and consolidation.

P.S. I am open to suggestions regarding what stocks should be added to the 52 week stock price list above. If you have any suggestions simply leave a comment regarding what stock(s) you wish included (and why) and I will see what I can do.


10 responses so far ↓

  • 1 Pete // Oct 29, 2009 at 4:13 pm

    Perhaps you could add Newcrest Mining and Woodside Petroleum. They’re pretty good barometers of sentiment for their particular fields.

    Looking at the data I guess it is easy to say “look how much we could have earned if we bought at the bottom”. Problem with the “bottom” is that it is the end of a downward trend…and a downward trend looks like it will continue downward.

    That’s why it is very hard to pick the bottom, and often quite perilous if you don’t pick it and the trend continues.

    But there has definitely been some good money to be made…and undoubtedly some people will expect this “rally” or “recovery” or even “boom” to continue for a lot longer, if they read the mainstream news or listen to their financial advisor. So they get to lose some money too.

    Besides, for every trade on a downward trend, there is a seller, and a buyer. If they are both trading on a trend, only one of them will be right.

    Incidentally, re: the RBA – I don’t agree.
    The RBA say they see inflation at around 3.9%, for whatever that is worth. It is obviously much higher if you decide to include a lot of other things (I won’t mention ‘that’ thing).

    Then there is this thing that someone posted on DR:
    http://www.elliottwave.com/freeupdates/archives/2009/08/18/Interest-Rates-Think-Central-Banks-in-Control-Think-Again.aspx

    Also, by increasing rates they send a message to the Gov. that bubbles are not okay.

    And finally, by increasing rates now, they give themselves plenty of room to decrease them later. It shows they have ‘control’. Because that is all they can do is put rates up and down. If they leave them low, then they have nowhere to move. If they put them up, then they can bring them down again and influence markets.

    But of course…they might be playing another game altogether. Perhaps they are corrupt. Or just weird.

  • 2 Greg Atkinson // Oct 29, 2009 at 4:29 pm

    Hi Pete, yes Newcrest and Woodside would be good additions. I will add those in next time I do the list..thanks.

    As for the RBA and Government to be honest I am getting a little weary of them both. One minute they in sync, then they get out of sync and now who knows. I am not sure why the RBA could not have waited for the first home buyers grant to trickle though before they tried to convince us they can actually do much to control inflation. (besides tweaking housing prices) Let’s face it oil is a big reason inflation has been under control across the globe so why not sit back and let oil do it’s thing? The global economy has plenty of built in economic stabilisers and they work a whole lot better if central bankers don’t try and fight them.

    Thanks for the link, this pretty much aligns with my view in that the RBA (and other central banks) react to global conditions as opposed to really driving anything. As I said a while back, the RBA board could probably be replaced by a computer program!

  • 3 Senator13 // Oct 29, 2009 at 9:38 pm

    Interesting selection. Pretty much all of them are closer to their highs then their lows. It is going to be hard for them to push ahead any further I think. With rate rises around the corner, ETS to deal with, and a bit of bad debts still filtering through the system. I am kicking my self that I did not pick up a few things I had my eye on – but such is life…

    I have been watching the Myer float with interest. It is looking over valued for my liking. I think the numbers are propped up by staff cuts and not sales and also from leasing out their floor space. It will be a good float from the seller’s point of view I think as they will get a good run publicity wise going into Christmas and having Jen splashed all over their prospectus. The float has been a marketers dream. It will be interesting to see how the numbers pull up in reality.

  • 4 Senator13 // Nov 2, 2009 at 4:23 pm

    Could last week and today be the start of a bit of a pull back for the market?

    I see Myer did not get off to the best of starts either – but it was a bad day on global markets and nothing much at all was green. Interesting to see how it plays out for the rest of the year.

  • 5 Greg Atkinson // Nov 2, 2009 at 5:23 pm

    Senator I have been waiting for a pullback of around 5% for a while and at current levels that is where we are about now. The All Ords might dip below 4500 but my feeling is we will be flirting with 4800 again and not sink too much lower.

    I would say the current correction is healthy and driven more by investors taking profits than panicked sellers.

  • 6 Anon // Nov 4, 2009 at 2:41 pm

    I have been slowly accumulating…deployed about 10% of my cash reserves. I am horrible at picking bottoms so i’ll probably just buy bits and pieces here and there as we keep going down until it gets really silly and then i’ll go “all in” keeping a minimum of 25% in cash (currently 45% cash).
    I’m not prepared to dump my shorts yet.
    My focus atm is on Media advertising companies and companies that are able to take market share and increase margins while the weaker players fold.
    I’m starting to increase my peak oil exposure having being underweight for sometime.
    I bght some gold equities — some have really underperformed the gold price which presents some good mispricing opportunities ! I’ve done a U-turn on my thoughts on gold given that its probably not that expensive given future inflationary pressures and historical under performance over the decades. Gold certainly cant decline if we have rampant inflation.
    Paul Tudor Jones:
    “As one would expect, rising inflation suggests higher gold prices, especially when the Fed is perceived to be behind the curve,” “Gold appears to be cheap. In our view, gold’s value should increase as its scarcity relative to printed currencies increases.”

  • 7 Anon // Nov 10, 2009 at 6:16 pm

    Market rises again !
    Small caps are beginning to underperform the market after a cracker few months. In response i’m begining to look at lagging medium/large caps.
    A few stocks i’ve recently bght — US market: Alcoa, BSX, WTU
    Aussie Market: AAU, OCP. I’ve lowered exposure to wine sector given poor results in this area and moved away from distressed equities investing. I found family ownerships greatly reduced the risks in distressed equity investing. However overall the results lagged the market and were unacceptable.
    I still think its abit early to be investing in mining given the stage of the business cycle but I figure I’ll just be alittle more selective and pick better quality instead of riskier small caps.
    I’m on the sidelines now after making discretionary investment decisions for a few months (very taxing). I’m going back to system investing to automate alot of my decisions. Atm my screens are not picking up many bargains at all.
    There are alot of cautious people out there so I am of the opinion that there is limited risk from here and we are just climbing the wall of worry.
    We wont be seeing the prices that we saw early this year for a very long time…i think it reasonable to assume its time to adapt to a normalised pricing environment which means lots more rocks will have to be turned over for the cheap skates ;).

    Above not advice, Do your own research you lazy b*stards 😉

  • 8 Greg Atkinson // Nov 11, 2009 at 11:47 am

    Anon I am pretty much sitting on my hands. I am a little worried that the RBA has an overly optimistic view of how the Australian economy will perform in 2010 as they seem convinced commodities will have a good run next year.

    From what I am picking up here in Japan next year is going to be pretty tough as well as companies are expecting demand from China to soften a little as the impact from Chinese government spending starts to drop off. If that turns out to be correct, then I can’t see how 2010 will be a boom year for commodities.

    Having said that I think you are right about many stocks being near multi-year lows so I am keeping a close eye a few miners, energy plays and even property trusts!

  • 9 Anon // Nov 11, 2009 at 1:37 pm

    Greg the BDI is breaking out.

  • 10 Greg Atkinson // Nov 11, 2009 at 3:54 pm

    Hi Anon – yes I have been watching it closely and mentioned it a few times in my tweets. Should be interesting to see how it runs for the nest of the year.

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