The Big Boys, page-8

Great to have a new thread set up in the space I want to play, so thought I better try and make a decent contribution. I wanted to offer up a trading idea of shorting Suncorp that I currently have open, with some technical analysis to support my thesis. It’s also on your list Success4.

Trade Idea: SUN Short

I took out a June put option when the price was $14.00 at the end of February with a $12.50 interim target. You can see this rolling over on the big timeframes and could go a lot lower but its going to have some counter-trends on the way. Enough in it to get on board still if you’re prepared to short. It’s interesting that you can see it rolling over even though the market has been so strong and it’s competitor QBE is on a run up. It the market gets the wobbles in April/May then it could fall very sharply.

Suncorp Monthly Chart: Gann Box

I find Gann Box structures really interesting. I don’t trade to them much, but they can give a big picture framework and also help with timing. Suncorp has followed the Gann Box structure really well over the past 18 years of data that I have on it as shown below. The pink highlights show where it has followed a Gann line up or down for a while and you can see how it then jumps to another Gann line. If you drop vertical lines from the intersection of the lines it can pick up a lot of turning points. I’m trading that it will follow the blue line down on the right of the chart but there are two alternative moves marked with red arrows along green Gann Box lines.



Suncorp Monthly Chart: Elliott Wave and Price Levels

There is too much on this next chart to write up without a whole essay. But it’s risen to a normal sub Wave 3 projection within a larger Wave 1 and has gone through a distribution pattern. It should fall 25% or more likely 38.2% from here before heading higher again, or if the market weakens could keep falling to the 61.8% retracement. There are other arguments for turning about the $13 level and heading higher. i.e it could be a larger Wave B, but the balance of probabilities for me are with a fall for the next few months, particularly if the broader market starts to weaken.



Suncorp Weekly Chart: Head and Shoulders and Trend Lines.

The clincher for me is the confirmed head and shoulders pattern shown on the weekly chart below. Normal 100% project of the peak would take it down to $12. This distribution pattern has also broken a long term up Trend Line.



Lots more analysis I could put on this, but the charts and comments above should make the case.

I’m trading this short anyway. Hopefully the broader market comes my way to give this a bit more of a sharper push down. Although there are some arguments for it turning and rising higher, this is not the point to back that view as it needs to turn up and another month or more to prove it can head that way before any entry or for me to close my short.

I'm feeling very comfortable on the short side at this point.