What the charts are looking like for some of the top stocks.
Westfarmer's: During the 1980s Wesfarmers rose exponentially to halt near $5 and enter a severe downturn halving its price by 1991. From there the stock established a well-balanced trend consisting of significant price rises followed by lengthy periods of consolidation in a triangular fashion. When the price reached $33 in February last year it was deflected into a downward phase, which has begun to develop some triangular characteristics. Given previous periods of consolidation it may prove to be preparation for the next major move higher. As the phase progresses, the stock could push higher towards $28.50 where it may pause again and oscillate between $26 and $28.50. After breaking through $28.50 the stock will target resistance barriers at $30 and $33 and then towards $40. The risk would be an extension of the phase on a drop below $26 into the $24-$25 support.
Coles Myer: After following a steep upward path from the late 1970s until mid-1992, the price for Coles Myer settled into a much broader upward channel but at a lesser gradient. When the price reached $9 in February, 1999, it hit into the return line of the channel and started a widely swinging phase held largely between $5.70 and $9 and is still continuing. In March this year the price spiked through combined support from the trend and the phase to $5.27 in a "bear" trap. The reaction produced a dynamic recovery with the price reaching $7.50 by July. In the $7.50 to $8 area the stock faces considerable resistance and may slow in its advance, pausing to consolidate. Support lies at $6.90 and $6.40 with the main barrier in the upward path remaining at $9. Once overcome, the stock would be launched on its next major advance towards $13.50 and possibly higher.
Foster's group: Foster's experienced a euphoric rise during the 1980s to top out in October 1987. From the peak at $5.40 the price entered a downward phase until March 1996 and, during its course, managed to wipe 70 per cent from the price by October 1990. An up trend then carried the price to a new peak in June 2001 at $5.77 before another downward phase. The down trend is being challenged with the recent rise to $4.50 as the price becomes wedged between support and resistance. At this point the support at $4-$4.10 appears stronger but more oscillations between $4.30 and $4.50 may be required to support a break of trend. A rise through $4.50 would meet a resistance zone at $4.65-$4.75 but would gain the potential towards $4.90-$5. The ultimate risk would be a breakdown of the longer-term up trend through $4.90 signalling a resumption of the bear trend.
Singapore telecolm: From a high of $2.12 in October 2001 the price for Sing Tel fell to $1.16 on March 11 and 12. The subsequent bounce and recovery stalled at the downtrend line at $1.37 in April, pulling back to consolidate. Since May the price has oscillated in an upward slanting extension of the base between $1.26 and $1.44. As the process continues there may be more price churning with a break through $1.50 completing the next stage. In this case the stock would then encounter its next barrier zone at $1.60-$1.65. An eventual breakthrough would signal the next major upswing for the stock through $1.75 towards $2. However, a note of caution is required. Before the breakthrough of the upper barrier can be achieved there may be some wider swings in price, which may see a return to test previous lows and would be signalled on a drop below $1.26.
Woodside: A powerful base built during the 1980s on the chart for Woodside was responsible for a strong upward path through the 1990s to peak at $16.45 in June 2001. A minor top formed with its completion on a drop through $12.30 breaking the upward trend. From there the price slid to reach a turning point at $10 in March this year. The price has rallied strongly to overcome barriers at $12 and $12.50, to halt in its approach to the $14 to $14.20 resistance zone. The price has pulled back and may seek support in its prior resistance zone in the $12 to $12.50 area before gaining the momentum to re-attack the $14 area. The critical barrier for the stock lies about $15 and this must be overcome to resume the upward trend. The risk would be a drop through $11.50.
Regina Meani is the author of Charting (Wrightbooks). The views expressed are those of the writer alone and investors should seek independent advice.
