A topical look at technical analysis factors for a number of key markets, and ASX stocks of interest.
The theme for today's ThinkTechnical is 'stocks in the news'.
The best performer on the ASX 200 so far today is fast food retailer Collins Food (CKF), up 14.5%. The company reported a 9% jump in full year revenue and a 5% increase in net profit after tax. Australian restaurants held up well during the covid-19 shutdowns with approximately stable same-store sales, but European stores saw declines in sales of up to 28%. Looking forward, sales appeared to be returning to pre-covid-19 levels.
Also doing well today is construction materials company Boral (BLD), currently up 5.5%. Boral noted today that Seven West Media (SVW), controlled by WA billionaire Kerry Stokes, has increased its stake in the company to 12.2% via.
Not faring so well, WiseTech Global (WTC) is currently the ASX200's worst performer, currently down 2.8% (on a strong day, ASX200 up 1.3%). WTC confirmed today that CEO Richard White sold 2.4 million shares, representing approximately 0.76% of the total issued capital in the company. Typically this is a negative sign for a company, as who knows its prospects better than the CEO? However, it is also worth noting that Mr. White still owns a substantial 46.9% of WTC shares.
Collins Foods (CKF)
Today's price action on CKF is certainly a monster. It has now created a gap between the 19 June high of $8.52 and the current bar's low of $9.08.
As long as $9.08 can hold, prices should continue to move higher as supported by rising short term moving averages, and what appears to be early signs of a reinstatement of the long term trend, as evidenced by an uptick in the long term moving averages.
Upside may be limited however by overhead static resistance from the 18 Feb high of $9.95, and then the 25 Oct 2019 high of $10.80.
The technical picture for BLD is certainly an interesting one. It is battling with long term dynamic resistance between $3.62 and $3.97. This level is reinforced by the long term static resistance from the long term trough set on 26 Aug 2019 at $3.93.
Typically the coincidence of such resistance zones leads to a congestion zone as the market works its way through stale sellers trapped in the stock from higher prices.
On the plus side, a potential long trade on a break above $3.97 would be supported by the close proximity of the dynamic support zone, defined by the short term moving averages around $3.55.
Also, the prevalence of higher troughs in the current ascending triangle pattern points to accumulation.
Upside targets may be limited by static resistance at the 16 Dec 2019 low of $4.42, and the 7 Feb high of $5.29.
WiseTech Global (WTC)
The WTC chart shows that it has struggled with the long term dynamic resistance zone around $21.20. It has now logged two unsuccessful attempts to break convincingly above it. Unfortunately, those two tops form part of a wider head and shoulders pattern, which is typically bearish.
Note also, the price has failed to sustain the short term dynamic support zone from the short term moving averages. The short term and long term trends, as evidenced by the direction of their respective moving averages, appears to be transitioning back to a short term downtrend/reinstating a long term downtrend.
Looking for downside targets, the 1 April high at $17.85 will likely come into play in the short term. From there, lower targets of $13.67 (from the 22 April low), and $9.97 (from the 19 March low), are also possible in the medium-long term.