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SUN - Suncorp Group

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While browsing blue chip stocks I've came across SUN as having one of the clearest wave structures on the market, almost textbook. This enables me to throw a forecast what could happen next on the highest probability basis using Wave Principle as guide.

I must note that I do not hold this stock at the moment, sold it just before last dividend ex date(I never take dividends). It was quite an easy to make profit on this stock so I am keeping a close eye maybe the future will throw a nice entry setup somewhere next year.

In the first chart you can see how SUN made nicely three waves up, even subdivisions are clear. This foretells that a rise is over and a stock is poised to go down to test 2009 low in the years to come. This bearish scenario will gain a lot of weight if stock closes below $9.8 thus overlapping with a (A) wave high. First indication of this drop could be the Impulse channel break and retest it from below, that's where long term investors should throw their investments or stop averaging down as much lower prices will be on the table later. The wave structure is the key-we need 5 waves down to confirm the trend up is over.


SUN1.jpg



Other scenario is still bullish longer term and SUN made only 3 waves out of 5. So I am looking here for some sort of correction which could extend in time towards the lower Impulse Channel but not brake it. It could be a Triangle, Flat or Expandet Flat, total of 11 variations available what form it could take so it is almost impossible to predict when it ends until it is not over. But if SUN keeps on going with the textbook pattern further, IT should end on the lower channel, about one year from now in a $12-13 zone. And then thrust higher to new highs in the final leg of advance .

So basically trading strategy is simple here-hold , collect dividends and add if channel holds. Or hold, collect dividends and sell if channel breaks and 9.8 level is breached. Basically all stops should be placed at this level because it is the last frontier for bull trend to hold. Wave (4) can drop to this level, but not below.

sun2.jpg


So shorter term (next few quarters) both variants are bearish. There is a small probability for wave 5(of(3)) could be extended where the stock could accelerate towards 2007 high without a one year correction, but it is not a textbook pattern so I stick to one of those variants discussed above.

Cheers
 
It's been more than half year since my last analysis and the stock seems to have not moved much since then. What is important that SUN was resisting a rally that a broader market had in the start of the year, meaning that market recognizes the Aug 2014 Top as important.

One may say that this sideways /down movement from the Top can be considered as a correction, but from the Elliot Wave perspective SUN sported an Expanding Leading Diagonal, consisting of 3's, which is a valid pattern to make a further forecast. Leading Diagonals, especially Expanding Ones, can be found at Important Tops. They carry a message of the rapid accelerated decline, so current subdivisions best looks like series first and second Waves down, with the third on the horizon.

I presented two possible scenarios in my analysis last year, and there is still no confirmation which one is at work. But medium term SUN should decline fast(compare to how it moved in the past 7 months) and slice down through 11,7 support. At the moment I count the bearish scenario, one that could possibly subdivide into full five wave decline ending somewhere around ~$10 in the months to come. Bullish scenario has the same or a bit higher decline target, just wave subdivisions should be corrective.

So probably sometimes later this year or mid of 2016 I can assess what waves are telling for the long term, but one must be aware that if bearish scenario develops, SUN is going to fall far below 2009 bottom of $4,3. In a bullish case $9,7 level will not be reached and SUN starts working it's way higher from the bottom of the drop that is fast approaching.

This analysis would be derailed if SUN manages to climb above wave 2 high of $14,2 from here, which is a low probability scenario.


sun out.jpg
 
I like this weeks break-out. First target is the gap fill to 13.00 which provides a good RR for the trade.

sun1504.PNG
 
peter2 said:
I like this weeks break-out. First target is the gap fill to 13.00 which provides a good RR for the trade.

View attachment 66286
Click to expand...

Nice trade Pete , in the zone to go the other way , report shortly ( tommorow ) , i think its overshot and will need a killer beat to maintain the trend . I am liking the fade here


ScreenShot890.jpg
 
peter2 said:
That's a bold decision just before news and against the market moving up.
Click to expand...

Not something i havent done 100 times before , time will tell , It is what it is . Technicals coming up against headwinds and fundamentals indicating fully priced . I am not a breakout trader , i sell upmoves and buy downmoves , its what i do
 
ScreenShot2252.jpg


SUN results out and i see as underwhelming , the smart bail was a month back , i see the slide continuing after div

ScreenShot2251.jpg
 
GB I think you should do better than that.

SUN was a shining light for me earlier in the year (bullish bars on the weekly chart). Then it's insurance division had problems with excessive payouts due to natural disasters. Price moved impulsively lower and seemed to have found support at 12.50.

The recent basing pattern seems solid and the BO-HR looks promising. There are two gaps in the daily chart that need to be filled and I'd target the higher one if I were to trade it. I'm not as I won't trade insurance companies anymore.

The other concern for me is that the subsequent price action in any rally could be corrective (after the impulsive move down) which can be messy. The higher gap fill also lines up with the 61.8 retracement level of the swing down.

It's also interesting that both SUN and QBE are up today when the market is down. The RSC(XAO) top pane also confirms that SUN is stronger than the XAO over the last 21d.
sun0410.PNG
 
I took a look at the weekly chart yesterday. Corrective higher, impulsive down = further weakness ahead. Potential "Buy Zone" either side of $11.00.
SUN.gif
 
Thanks Porper. I often overlook the much larger chart. I agree with your outlook.
There's room for a small counter trend trade long within the larger pattern.
 

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