Qantas QAN
Hi Captain, not trading it lately and haven't been paying attention, but happy to have a look.
Monthly Chart: (sorry, haven’t cleaned this up too much).
Just have a look across the whole chart. You can see that it’s gone broadly sideways (vs a stable long term uptrend) between that $2.30 and $4.15 zone (marked in thick blue dot dash lines), although with big mean-reverting swings. This shows it’s not a buy and hold stock. Since 1998 to make money you had to trade it, albeit some of those swings are two year trends.
What I was trading back in March, April, May was that Rising Wedge shown, which held on for a bit but eventually came my way and broke down.
At the time I entered, I read somewhere that Alan Joyce was expected to have one year to go then retire. He then launched a share buyback scheme to prop up the price. Made me nervous shorting against a CEO with $500m to buy his own shares, but the chart won in the end.
Now that wedge breakdown has completed and it's bounced, its in a counter-trend and can go either way depending on your FA view of oil etc. Note that I still think Alan Joyce will try to hold up his share price if exiting within 12mths.
Have a look at the retracement levels in blue. It reversed at the 50% level ($2.583) of the rise from $0.95 in Dec 2013 to the $4.215 top in April 2016. Interesting.
Referencing the black levels of the ATH on the right. It dropped below the critical ATH50% level, but has then managed to get back over it. Have a look back over the monthly chart to see how critical that $3.00 level has been (shown as solid black line), providing either support or resistance to the large scale monthly swings. So that’s critical to any long trade and you’d prefer to see it tested. (Stocks in decline don't often get back up over the ATH50% once it's broken through, like this has, so that's positive)
It needs to hold and consolidate above that ATH50%, which if confirmed, should see it bounce up to one of those pink retracement levels of the last swing down. I’d be looking for it to maybe swing between the ATH50% and ATH61.8% levels for a while. I’ve marked that zone in a shaded purple box. I also copied the same size box over to the period from 2003 where it also dipped below the $3.00 level and then spent two years in a sideways phase.
I can’t see it getting back up over $4.00 for a long time with the break down that it’s had. Still it’s possible to swing trade that quite profitably within the $3.00 plus zone shown over 1 to 3 month periods say.
Weekly Chart:
I haven’t shown the weekly, but current weekly bar suggests down next week. Let it test the $3.00 level and if holds on weekly and goes green again, then its ok to go for a long swing trade.
Note that the current counter-trend up from the recent low has been 5 weeks. That looks like more of an uptrend pattern forming, after say the next week or two down, but be wary of a further break down until it gets through 12 weeks from the recent low.
Conclusion:
Let it test $3.00. If breaks through and closes below it on the weekly chart, then you can short it down to $1.50. But if, as more likely, it holds $3.00 and gives a green bar again on the weekly, go for a long swing trade is fine. But it’s not a long term hold, it’s a trade.
Note: I consider there to be a huge general market risk in the next month or so, with potential bear market on Dow.
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