Hera as the technicals are early days and still unfolding, yes you need to be taking a view on fundamentals for a long term buy and hold if you want in. It sounds like there’s a business here but I’m not sure about kitchens and a long term punt on the residential market. The Sydney perspective is of looming market oversupply of apartments which might give an initial boost as these are completed and fitted out in the next year or two, but will get hard for retailers after that. Have a look at CSR and Harvey Norman to see what fund managers currently think of both building suppliers and furniture/kitchen suppliers. Both turning down after hard runs.
However, if you want to look for a bullish case technically, you’re essentially arguing that the 17 weeks down to the low at $0.78 was impatient float investors who are now done, and that the 7 weeks from the low to date is the start of the move up.
I use counter-trends all the time for my entries, when the background is supportive. As discussed in my earlier post you’re looking for an initial move up, a 1 to 4 bar maximum reaction, and then the initial move up to resume. If we get a green weekly bar next week (ideally closing high and above that ATR50% $0.94 level) then you will have that condition. If it does anything else next week then it will need more time to build and leave it alone.
I can’t get the FID chart to come up in my very powerful charting package. Very usual, don’t know why. I looked it up on Commsec charting which is a bit primitive. This has the FID chart starting in February 2015 if that’s correct. It went 29 weeks sideways then took off. Count the FID weekly bars from that 29/9/2015 bar where it took off. There are three bars up, then a 4 bar reaction and then the stock took off again. As soon as you get that 5th bar turning up on 9/11/15 it shows the 4 bar reaction was a valid counter-trend in a bull move and the uptrend is resuming.
That’s what could be happening now in SHM or at least that would be your first confirmation at the end of next week of what might be unfolding. Hope that makes sense. So without changing anything about my earlier post, you might get an early signal for an aggressive entry at the end of next week if it goes green.
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