CIMIC Group Ltd. 

CIMIC Group (ASX: CIM) is an ASX-listed multinational contractor company that deals in engineering-led construction, mining, and other services. The company is also engaged in Public-Private Partnership (PPP) business model. It has a presence in Australia, Southeast Asia, New Zealand, and the Middle East.

As per our previous recommendation on CIM as on November 30, 2020, we recommended a ‘Buy’ rating on the stock from the technical analysis standpoint. However, considering the recent price action, technical indicators analysis, and current market scenario we are of the view that it is reasonable to exit from the position as some correction may be witnessed. Hence, we give a 'Sell' rating on the stock based on the close price of AUD 24.85 as on December 22, 2020. The summary of our 'Sell' rating and price movement since the previous recommendation for CIM is provided as below:

Price action and technical indicator analysis (on the weekly chart):

CIM’s prices moved up ~9.64 percent from the recommended entry-level of AUD 24.80 and made a high of AUD 27.19 on December 04, 2020. However, prices are not able to sustain above the downward trendline resistance level of AUD 26.96 and recently prices broke upward trendline support level of AUD 25.22. It appears that the prices could test its next immediate support level of AUD 23.64 which lies at 50-period SMA. 

Conclusion:

Considering the above-mentioned price action, support, resistance, and volume analysis, we recommend a ‘Sell’ rating on CIM and suggest investors to exit the position based on the close price of AUD 24.85 as on December 22, 2020.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume and we consider stocks with greater than or equal to 200,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is December 22, 2020.

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Our publications are NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion.  Past performance is neither an indicator nor a guarantee of future performance.

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