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Charts review: All Ords, Telstra, Qantas, BHP & Woolworths

February 18th, 2011 · Greg Atkinson · No Comments

Now that the ASX All Ordinaries Index has broken through and closed above 5000, more than a few market watchers seem to be quite bullish about the prospects for the Australian stock market.  But will the share market rally from here or will another correction roll along and push it below 5000 yet again?

According to many of the reports I have seen in the media,  apparently the Australian economy is still a marvel to behold and once the economic  impact of the Queensland floods are out of the way, we can expect robust growth again with the ever-ready RBA poised to raise rates again to prevent the economy from over-heating.

But despite massive profits at mining companies like BHP Billiton and Rio Tinto, the ASX All Ordinaries is just holding above 5000 with the S&P/ASX 200 still lingering below 5000.

So what is happening and what are the charts indicating?

Telstra ASX:TLS 3 year stock price chart

telstra-3-year-chart-feb-11

Poor Telstra investors have had a bad run for some years with the Government effectively using it’s power to create the NBN Co in order to pull down one of the few Australian owned companies truly large by global standards.

The Telstra price has come off a multi-year low but it’s hardly a rally to get too excited about and does not reflect any underlying strength in consumer spending in my view.  Therefore I would not be counting on the TLS share price to help push the All Ords much higher.

Qantas  ASX:QAN 3 year stock price chart

qantas-3-year-chart-feb-11

Qantas passenger traffic has picked up in recent times but it’s stock price certainly has not helped push up the All Ords or ASX 200 over the last few months.  The Australian tourism sector is still in trouble and Qantas is facing increasing competition on it’s international routes.

Qantas is yet another major blue-chip Australian company that is facing some serious challenges over the next 12 months or so. Personally I would not be tempted to buy into Qantas shares unless the rumours of a merger with Singapore Airlines started to circulate again.

Next, let’s look at one of the more defensive type stocks – Woolworths.

Woolworths ASX:WOW 3 year stock price chart

woolworths-3-year-chart-feb-11

Although the Woolworths stock price held up fairly well during the global financial mess it has since struggled, largely due to increased competition from Wesfarmers owned Coles and consumers starting to cut back on spending.

Again as we can see from the chart above, this is not a stock which has helped push the All Ords up above 5000 recently.

So what has been moving the Australian stock market up?  Generally speaking –  miners and banks.

Since there has been a lot of focus on BHP Billiton recently due to their massive reported profit, let’s have a look at their stock price chart.

BHP Billiton ASX:BHP 5 year stock price chart

bhp-billiton-5-year-chart-feb-11

The BHP share price is now close to the peak of 2008 and looks a little pricey to me.  Having said that, the stock has enjoyed a strong rally since late 2008 and has been one of the shares that has pushed the ASX All Ords and S&P/ASX 200 higher over the last few months.

The major banks have also been on the rise and I will cover their charts soon.

Finally let’s have a look at the ASX All Ordinaries Index.

Australian ASX All Ordinaries Index XAO 5 year chart

asx-all-ords-5-year-chart-feb-11

I guess there are a few ways you could read this chart. If you are a market bull you would see the rally from around the 3rd quarter of 2010 and perhaps think this is the start of something big.  If you are a bear, you would look at the peak of 2007 and probably say the stock market is still in bear market territory.

At this stage I feel we are likely to see the market correct again soon and then start to move sideways again while investors wait to see if the US recovery gains speed.  Of course any slowdown in China will shake the commodities markets but even if that happens, I doubt we will see the market break below 4000 again.


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