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ASX Charts Review: Big Four Banks, WES & WOW & IJP

June 2nd, 2015 · Greg Atkinson · 9 Comments

On the surface it may seem that not all that much is happening in regards to ASX 200 stock prices apart from the significant bounces up and down each other day. Generally speaking the S&P/ASX 200 Index (XJO) has been trading within a fairly narrow range for around the last month, but under the surface there are some interesting stocks that are worth keeping an eye on.

Of particular interest to me is how the Big Four Banks are faring and the chart below shows the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Australia New Zealand Banking Group (ANZ) and Wespac Banking Corporation stock price movements over the last two years.

CBA, NAB, ANZ, WBC – 2 Year Stock Chart


Clearly all these shares have done fairly well over the last couple of years even after the sell-off in April and into early May 2015.  However I reckon that the next couple of years is probably not going to see these shares posting the same sort of gains as they did in the previous two years. Personally (and this is not investment advice) I’m not inclined to be a buyer of the banks at current prices, but since they all pay a fairly good dividend I’m not inclined to be a seller either except to lock in profits whenever that is possible.

It’s probably too early the say that the stock prices for these banks have peaked for now, but I doubt there is too much upside left in them for a while. Having said that if the RBA keeps cutting interest rates then the yield hunters may push these stocks to new highs.

Interestingly the investment bank focused Macquarie Group (ASX:MQG) is on a bit of a roll and it’s share price is close to passing that of the Commonwealth Bank.

Commonwealth Australia Bank & Macquarie Group – 2 Year Stock Chart


I’ve been a long term holder of Macquarie Group (and before that Macquarie Bank) and watched it’s share price close in on $100 before the GFC and then crash back to earth (and under $20) in 2009.  Needless to say if MQG shares nudge $100 again it might be time to take some profits just for the sake of my nerves!

Meanwhile two defensive type stocks worth watching are Woolworths Limited (ASX:WOW) and Wesfarmers Ltd. Up until 2014 these two stocks moved fairly much in sync as a pair over the last two years but this year, Woolworths stocks have been sold off whilst Wesfarmers shares have held up fairly well. (despite a slump in coal prices)

Woolworths Limited & Wesfarmers Ltd – 2 Year Stock Price Chart


My view at the moment is that Woolworths (WOW) shares probably have more scope to move higher over the next couple of years than Wesfarmers shares. However I’d like to see the ASX:WOW stock price fall a bit further before I was tempted to take a long term position. (and again this is not investment advice)

Finally with Abenomics making into the news and Japan’s Nikkei 225 (stock market index) trending higher this year let’s have a look at one way investors can gain exposure to the Japanese stock market and that’s via the iShares ETF – IJP (ASX:IJP)

iShares Japan ETF (ASX:IJP) – 2 Year Price Chart


I have been long Japanese equities for many years and at times it has really tested my patience, but finally it’s starting to pay off and from what I can see on the ground here being in business in Japan, there are signs that the economic recovery will continue.

I’m not suggesting anyone invest in Japanese stocks, but it is a market worth watching as are other overseas stock markets as it helps investors diversify away from ASX stocks.

This article was written by Greg Atkinson who is the Managing Director of Ohori Capital. Greg is from originally from Sydney but now works and resides in Japan. He can be followed on twitter via GregAtkinson_jp

9 responses so far ↓

  • 1 lachlan // Jun 10, 2015 at 6:31 pm

    Yeah the banks are good to watch. There are some warning signs to be seen in many of these stocks. WBC and WOW have bearish indicators worth watching having taken hard hits and down through a few support levels very recently. As I said years back though I wouldn’t want to try shorting these particular things (financials). Short selling in many markets often seems to me like an adrenaline sport and I get enough of that already. It’s tempting though when markets look extended.

  • 2 Biker // Jun 12, 2015 at 10:45 am

    “As I said years back…” Today, back in 1976, Ronald Wayne sold his 10% stake in Apple for $800. Apparently its value right now is over 58 billion.

    It’s amusing to look back at past perceptions, missed opportunities and mistimed sells!

  • 3 Greg Atkinson // Jun 15, 2015 at 10:17 am

    I don’t try and short stocks but I did take a sort position against the ASX 200 a few weeks ago.

    Overall though I reckon the ASX 200/All Ords are going to find it tough to hit the pre-GFC high this year and so we could be looking at almost a “Lost Decade” for the Australian stock market!

  • 4 lachlan // Jun 15, 2015 at 6:36 pm

    Yep that’s how we learn things eh BP…you know, hopefully I mean.
    Greg some years back now I had shorts on the dow (in effect) via some cfd positions which took a lot of time to set up, although it was destined to become a very short term trade, from memory it was the final leg of an ABC retrace… and it fell like a stone as many other traders thought it would too at that time… over 700 pips in no time. I closed some positions out for the profit and let some positions go which were stopped out soon after as the market bounced hard and went on to rally higher. Anyhow Greg I know you have a different type of trade. I’d probably short from the top too rather than off a retest of resistance… if I were to try again. Too lazy for that caper eh.

  • 5 Greg Atkinson // Jun 20, 2015 at 3:12 pm

    Well at the moment the ASX is still bouncing around with no real trend clear yet. I suspect this week might send things down especially if looks like Greece will default on its payment to lenders.

    It will also be interesting to if Chinese stocks continue to be sold off..perhaps another 10% fall?

  • 6 lachlan // Jun 24, 2015 at 6:10 pm

    Bad news often accompanies the start of a rally too and a technical reversal has taken place on our market now. The dow also was charging back last time I looked. It may stay true and go to a higher high or maybe it will be invalidated, I don’t know and its too hard to call but anyhow Greg it’s making life interesting.

  • 7 Greg Atkinson // Jun 29, 2015 at 10:07 am

    Looks like the market is taking a “Greece” hit today and will probably end down near 5400. I suspect the sell-off in Chinese equities is also pulling the ASX down as well but on the bright side, many ASX listed stocks are probably now in the value zone again.

    Still it’s going to be hard work for the ASX 200/All Ords to post a healthy gain for 2015 from here and the 6000 level now looks almost beyond reach for now.

  • 8 lachlan // Jun 30, 2015 at 5:46 am

    that was a strong down day Greg, 123 points on the xjo. So the bear trend remains in tact. That move has put the xjo at it’s first major test of support which could raise ones hopes however the dow has had a strong down move over night, about 350 points currently.Your short position looks good now Greg.

  • 9 Greg Atkinson // Jul 3, 2015 at 11:48 am

    Yes Lachlan the ASX 200/All Ords look pretty weak at the moment but it’s getting close to the point at which I will exit my short position and look at going long again.

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