JB HI-FI LIMITED 

Technical Analysis: JB Hi-Fi Limited during the month of October so far, traded in the range of $23.92 to $25.30. The scrip attempted to touch the levels of $25.11, two times between 10^th Oct and 16^th Oct. From August month closing onwards the scrip has followed a downtrend with small pull backs but failed to breach the upside resistance made on 31^st August near the levels of $26.45. Number of short positions reported attributed to 20.05% in terms of its shares held short. Decreasing trading volumes along with no indication on price charts for reversal of trend indicates that the move can be more of sideways to downside. The scrip is currently at $24.61 trading near the mean deviation of Bollinger bands and long wick on upside indicating sellers taking charge over buyers. Taking a look on major indicators like Relative Strength Indicator (RSI) at 46.98, and Moving Average Convergence Divergence (MACD) indicating entering in negative territory signal downside move. The group has witnessed decreased return on capital, volatile dividend per share, high level of debt and slow growth rate of earnings and revenues. With Amazon spreading its retail offering in Australia, a major damage is faced by JB-Hi-Fi Limited with no supportive technical and fundamental views on the scrip. Hence, we maintain our stance on avoiding the scrip trading at current market price at $ 24.61 till a reversal pattern formation develops on charts. Meanwhile, the stock has been under pressure given the heightened competition in retail space.

GALAXY RESOURCES LIMITED 

Technical Analysis: Galaxy Resources Limited touched the one-year low levels of $2.17 on 18^th Oct and after touching the lows the scrip closed at the levels of $2.22 and opened exactly at the same levels during next trading session and made a high of $2.39 well above the high of previous day levels of $2.35. On price charts the formation of “Bullish engulfing “is clearly made which indicates the upside move to occur in next few sessions and the downside to halt. The bullish view gets a support in line with increased volume as indicated. Number of short positions represented 16.32% of shares being held short largely backed by the concerns that lithium prices will sink in the coming years as the supply increases.Formation of bullish engulfing at the lower end of Bollinger bands with no expansion of Bollinger bands on the lower side indicate the bounce back move in near term. Taking a look on indicators, RSI at 42.72 with MACD consolidating in negative zone indicate for a pull-back in near term. With overall a downtrend, we maintain a hold on the scrip  which is currently trading at  $2.36, until clear bullish signals  are above major resistance levels. GXY released a quarter update on 18^th October mentioning data on production which indicates that there was around 35% reduction in production as compared to previous quarter and the fall in production was on account of lower feed grade and delays in completion of yield optimization project, which leads to reduced recoveries. However, with next quarter result we expect some improvement on production front and with slightly moderate technical we maintain“Hold” at $2.36.

OROCOBRE LIMITED 

Technical Analysis: Orocobre Limited made a low of $3.47 on 14 October, 2018. The formation of lower lows on price charts along with RSI already on oversold zone indicates positive divergence and signals bullish view in near term. MACD consolidating in negative zone indicates sellers losing control and buyers gaining momentum in near term. Number of short positions reported accounted for 16.50% of shares held short. Recent introduction of an export tariff by the Argentine government and concern over lithium prices had weighed on the scrip. We now have a positive view on the scrip at current market price of $3.62 for near term.Fundamentally as the company primarily focusses on the exploration and development of Lithium, and with Lithium battery market size projected to be around US $69 billion by  2022, we expect positive growth  for the company in near term. We recommend a “Buy” at CMP of $3.62 given the key assets of the group and lithium price resurgence.
 
 

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