CBA sell signals?

[russholmes]

Any chartists out there care to comment on teh CBA chart? To my novice eye a close below $42 would break support?

[Halebop]

I'm not much of a chartist but I think CBA is looking technically weak just now. There were potential support lines at around $43 and $42 and both of these looks to have been ignored. The confirmed Secondary uptrend was also broken at the same time.

The next obvious support line for me is $37. Coincidentally this is also lining up with the 2003 Major (but tentative / unconfirmed) uptrend line...

[Phaedrus]

I have been monitoring CBA's 2 year uptrend using the 6 indicators plotted below. All 6 have now triggered Sell signals. These Sell signals began on 24/5/06 with most firing on 31/5/06 and the last (the trendline break) on 7/6/06. Prior to this, none of these indicators had triggered any Sell signals over the last 2 years. I am now completely out of CBA.

[russholmes]

This was my dilema, on one hand, proven steady growth, PE of 13. On the other hand the charts show sell signals..

Have sold out, will be back in at $37

[tricha]

Sorry Russholmes, unless there is a major crash, which is remotely possible.

99% chance it will go up and away.

In fact Mr Murray who was CEO of ASB bank in NZ, did such an outstanding job there.
Chances are he will do it with CBA as well,it will be $50 by Christmas.

[Halebop]

quote:Originally posted by tricha

Sorry Russholmes, unless there is a major crash, which is remotely possible.

99% chance it will go up and away.

In fact Mr Murray who was CEO of ASB bank in NZ, did such an outstanding job there.
Chances are he will do it with CBA as well,it will be $50 by Christmas.

Are you as certain of the share price as you are of the former ASB CEO? (Ralph Norris).

[tricha]

Halebop - how right u r. thanks for correcting me.

Are you as certain of the share price as you are of the former ASB CEO? (Ralph Norris).

yes, CBA are going up, just like the whole ASX will do, with all these tax cuts coming into force next week, a lot of it will find its way into the share market.

But as everyone knows, nothing in life is for sure, except taxs and death.
While China keeps booming so will OZ.

[Halebop]

quote:Originally posted by KW

A rising share price means a company is continuing to increase profits. However, this is not likely for the banks, which is why the sector is on the nose, due to:
- interest rates rising means less borrowing, therefore less profits
- all banks are now cutting bank fees, therefore less profits
- RBA is cutting interchange fees, again less profits
- declining use of credit cards (due to RBA regulation) .....
- loan default rates are rising ....
- competition for mortgages in a slow market means lower margins ...
- increasing costs as banks open more branches and add staff to improve service levels ....
- retail super fund management fees being dropped in order to compete with industry funds ...
- no further cost cutting programmes left to do ...
- slowing economies in Australia and NZ, less business investment banking ....
- falling housing market, less home equity borrowing/refinancing ....

I could go on, but on the whole, there isnt much good news in the banking sector at the moment.

Personally I think the econonomy will remain relatively strong thanks to being in a near perfect demographic phase. A recession now would be mild (probably technical rather than "forceful") in comparison to the same in the 70s or 80s. Having said that, some factors are relatively weak on a number of important fronts but particularly housing.

In the context of your comments above holders might want to consider CBAs historical failure to increase market share. If the banking market as a whole is in for a soft'ish patch, CBA seem unlikely to outperform its peers.

[bambi]

Phaedrus:
Your chart makes a lot of sense and I'd like to get some advice from you.

Based on your chart the entry points look obvious and I guess you bought a position as each indicator was hit. But how did you choose the values for each indicator? eg RVI(45) how did you come up with 45? Do you back test each stock and see what works best? I'm struggling with this at the moment so this would be very useful to know what others do.
Also why did you choose the EMA instead of a SMA?
And lastly how did you set the 7% trailing stop? Is this based on an ATR or a previous support? It doesn't appear to be a previous support level.

I'm really interested in TA and have been reading back through your old posts to try and work out what you have been doing and what works.

Bambi

[stevieb]

quote:Originally posted by KW

A rising share price means a company is continuing to increase profits. However, this is not likely for the banks, which is why the sector is on the nose, due to:
- interest rates rising means less borrowing, therefore less profits

Actually no, interest rates rising means less NEW borrowing not less total borrowing (= new + EXISTING), in fact higher interest rates usually make it harder to pay off existing debt (exactly your point on loan default rates below - you can't have both sides of the argument) so EXISTING borrowing stays high.

quote:
- competition for mortgages in a slow market means lower margins ...

Have heard this theory before but have also seen some evidence of the opposite, i.e. bank increase their loans rates much more readily on loans than deposit accounts so what they lose on loans they gain on deposits.

quote:
- retail super fund management fees being dropped in order to compete with industry funds ...

Only minimal evidence of this to date though it has been suggested. However against this you need to weigh the massive advantage of super under new super laws. I think fun inflows and growth of funds under management will easily outweigh any loss of revene due to marginal fee cuts.

PS for all those TA people I think you'll find CBA looks a lot better on TA grounds than just 2 weeks ago