Australia: S&P/ASX 200 (.AXJO) Is it time to take profit?
he AMA Group Ltd (ASX: AMA) share price has jumped to a record high this morning after the panel beating and automotive services group released a trading update.
The AMA share price advanced around 3% to $1.29 at the time of writing, taking its gain to nearly 50% since January when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index is up 16%.
Investors found new reason to keep bidding the stock higher as management is forecasting an extra $120 million in revenue and $12 million in earnings before interest, tax, depreciation and amortisation (EBITDA) from recent acquisitions and Greenfields expansion of its panel beating network.
The upgrade is based on a 12-month run rate once the eight takeovers are bedded down and new shop openings (three in total) are established.
The earnings increase equates to around a 21% uplift to the group’s expected EBITDA for the current financial year, which management reiterated will be around $58 million.
AMA has a good track record of growing by acquisitions under its last chief executive Raymond Malone (who has since become the executive chairman) and the group continues to show good discipline when it comes to mergers and acquisitions (M&A).
Is it time to take profit?
The average multiples paid for targets are an attractive 3.8 times earnings, although some may be concerned with the growing amount of debt used to help fund these deals.
There’s also a shift in focus with the group expanding into the heavy motor space and has taken the third largest east coast consolidator.
However, its gearing levels haven’t reached a point that would worry me even though it’s up significantly from a year ago.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 6,671.53.
The projected lower bound is: 6,430.57.
The projected closing price is: 6,551.05.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend (which appears to be the case with S&P/ASX 200) this pattern implies an end to the rally as the bulls appear to have exhausted themselves.
During a downtrend the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.
An inverted hammer occurred. If this occurs during a downtrend it implies a reversal. Look for a confirmation of the reversal on the bar.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend(which appears to be the case with S&P/ASX 200) the long upper shadow indicates that the bears are gaining control and a top may occur.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 92.8979. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 65.61. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 13 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 153.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.
Rex Takasugi – TD Profile
S&P/ASX 200 closed down -2.600 at 6,543.700. Volume was 8% above average (neutral) and Bollinger Bands were 22% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 6,415.73 6,336.43 6,047.33
Volatility: 15 12 14
Volume: 664,081,472 595,412,544 618,986,752
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
S&P/ASX 200 is currently 8.2% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 1 periods.
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