S&P/NZX 50 On Strong footing – Heavyweights Under Bullish Setup – ATM, AIA, and CRU

  • Aug 05, 2020 NZST
  • Team Kalkine
S&P/NZX 50 On Strong footing – Heavyweights Under Bullish Setup – ATM, AIA, and CRU

Summary

  • The S&P/NZX 50 index is recovering in momentum with a price appreciation of ~ 43.79 per cent in a relatively short span.
  • The surge in the major equity index is well supported by the bullish setup of some blue chips stocks.
  • Blue chip stocks from GICS industry, including, Travel, Tech, and Dairy are showing interesting developments on charts.
  • Heavyweights from Travel, Tech, and Dairy in S&P/NZX 50 Index- A2 Milk, Auckland International, and Chorus Limited on charts.

S&P/NZX 50 index is the talk of the town in the wake of a recent sentiment splash seen in blue chips stocks. The index is hovering near the 12,000 mark with the benchmark index surging from the 8,209.04 (intraday low on 23 March 2020) to the present high of 11,803.93 (as on 22 July 2020) to mark a price rally of ~ 43.79 per cent.

Since contouring the recent high of 11,803.93, the index is trading around the same level, supported by the gush in blue-chip stocks from a multitude of sectors, including travel, technology, and dairy.

To Know More, Do Read: NZX Momentum Gainers- Pacific Edge and TruScreen

S&P/NZX 50 On Charts

S&P/NZX 50  Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On following the daily chart, it could be seen, that historically the pair of short-term exponential moving averages have traded above the pair of long-term exponential moving averages, which in turn, reflects that the initial trend prior to the recent sell-off instigated by the market fear in the wake of a global economic meltdown was an uptrend.

  • In the recent past, the pair of short-term exponential moving averages moved below the pair of long-term exponential moving averages, suggesting that bearish sentiment took charge.
  • However, post a drastic fall, the recent surge in S&P/NZX 50 is again showing a bullish setup with the pair of short-term exponential moving averages again moving above the pair of long-term exponential moving averages with a large separation between them, suggesting that, at present, bullish sentiments prevail in the market.
  • Moreover, the recent surge in the index is well supported by volumes, which could be inferred from an upward sloping On Balance Volume (or OBV).

S&P/NZX 50  Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

 

On further magnifying on the recent price action of the index, it could be that both pairs are now separating away from each other, suggesting that bullish sentiments are once again dominating.

  • The 14-day RSI is moving in tandem with the price action and is trading above the mean value and well below the overbought zone, reflecting the strength in the bull run.
  • However, the 12,24,9 MACD indicator is showing a negative signal.

While a bullish setup is taking roots on the major market index, blue-chip companies are resurfacing with some quick price gains from their recent low, supporting the surge in the S&P/NZX 50 index.

Heavyweights from Travel, Tech, and Dairy in S&P/NZX 50 Index

A2 Milk Co Limited (NZX:ATM)

ATM  Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On the daily chart, the stock is testing the +2 Standard Deviation (or SD) of the 20-day simple Bollinger band while trading above long-term exponential moving averages of 200- and 50-day, suggesting that the primary trend is an uptrend.

  • The +2 SD of the Bollinger band should act as immediate resistance for the stock while the mean value of the Bollinger, followed by -2 SD of the Bollinger should act as immediate to decisive support for the stock.
  • Also, as the -2 SD of the Bollinger band and 50-day EMA are overlapping with each other around the same zone, it should act as decisive support, a break and price action below which could seed bearish sentiments.
  • The 14-day RSI is moving in tandem with the recent price rally and is currently above the mean value while trading below the overbought zone, suggesting that there might be some steam left in the stock, provided ATM breaches the +2 SD resistance and confirm the same.
  • However, it should be noticed that the 12,24, 9 MACD indicator is showing a negative signal, suggesting that the stock could correct over the short-term.

Auckland International Airport Limited (NZX:AIA)

AIA  Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On following the daily chart, it could be seen that the stock tried a breakout above the 50-day EMA during past few trading sessions; however, failed to sustain, and is currently trading around the 50-day EMA, reflecting the tug-of-war between bulls and bears to change the direction of the intermediate price trend.

  • Moreover, it should be noticed that the 20-day simple Bollinger band is squeezing while the stock is reverting to the mean value, which coupled with a flattening On Balance Volume could be an early sign of a short-term correction.
  • Furthermore, the 14-day RSI has also moved below the mean value towards the oversold zone.
  • The support for the stock is intact at -2 SD of the 20-day simple Bollinger band.
  • The stock is currently struggling to break above the near-term resistance zone of the mean value of the Bollinger band, which is overlapping with 50-day EMA; thus, is decisive in nature, and a break and sustain above the same could seed bullish sentiments.

Chorus Limited (ASX:CNU)

CNU  Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On following the daily chart, it could be seen that the stock moved above both 200- and 50-day EMAs after slipping below the 50-day EMA in the recent past and has revised the mean after rebounding from the 200-day EMA, suggesting that the primary trend is an uptrend and bullish sentiments prevail.

  • Now, the +2 SD of the Bollinger band should act as resistance for the stock while the mean value (which is overlapping with 50-day EMA) could act as immediate and decisive support.
  • Also, the recent rebound in the stock from the 200-day EMA has increased the volatility in the stock, which coupled with a mixed bag of technical signals from various indicators, is suggesting that the stock might witness some large upside and downside move in the short-term before finally picking one ultimate direction.
  • The OBV is sloping downside in tandem with the price action while the 12,24,9 MACD indicator is giving a negative signal.
  • However, the 14-day RSI has just moved above the mean value and is well below the overbought zone.

 


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