WOW - Woolworths Group

[issh]

A first plus day for a while

 

[nulla nulla]

A first plus day for a while

But is it only a "dead cat bounce"?

 

[Porper]

But is it only a "dead cat bounce"?

Plenty of confluence around $30.00. Ideally we'll see one final washout and get a buying opportunity.

 

[nulla nulla]

Plenty of confluence around $30.00. Ideally we'll see one final washout and get a buying opportunity.

But how deep will the "final wash out" go?
At what point will the analysts that have rated wow a "sell", switch to a "hold" or a "buy"?
Is there still potential for one or more legs down?

How much of this retrace is simply brokers/fund managers churning the stock for fees?

 

[Porper]

But how deep will the "final wash out" go?
At what point will the analysts that have rated wow a "sell", switch to a "hold" or a "buy"?
Is there still potential for one or more legs down?

How much of this retrace is simply brokers/fund managers churning the stock for fees?

Brokers often change their view after the event (A reversal). Just because Brokers are predominantly bearish doesn't mean too much. The "typical" retracement zone aligns with a zone of support. If a reversal higher is going to commence then the $30.00 area is the place where buyer's should be seen.

 

[Triathlete]

But how deep will the "final wash out" go?
At what point will the analysts that have rated wow a "sell", switch to a "hold" or a "buy"?
Is there still potential for one or more legs down?

How much of this retrace is simply brokers/fund managers churning the stock for fees?

I am still of the opinion that $29 will see the retracement of a wave A down complete in which case price should move back up in a wave B formation anywhere between $34 to $37 and even as far as the previous high of $38.92 before turning down into a wave C and bringing price back down anywhere between $33 and $26.
Anyone else have ideas in regards to Elliot wave concept?

 

[rimtas]

How about the fact that WOW has risen in three waves from Jul 2013 bottom to April 2014 top? You can't fit it into Triangle.

 

[Porper]

But is it only a "dead cat bounce"?

At this point in time the chart below is my take from an Elliott Wave point of view.

5-waves up followed by an expanding flat. With these types of patterns wave-b will often hit the 1.382 extension of wave-a which is a direct hit here. Wace-C is often 1.618x the length of wave-a which came very close to being hit. This means slightly lower levels could be made before the turnaround commences. Also, as I mentioned yesterday the target area using Elliott Wave coincides with a good zone of support. Below $28.41 means the analysis is incorrect.

 

[Triathlete]

At this point in time the chart below is my take from an Elliott Wave point of view.

5-waves up followed by an expanding flat. With these types of patterns wave-b will often hit the 1.382 extension of wave-a which is a direct hit here. Wace-C is often 1.618x the length of wave-a which came very close to being hit. This means slightly lower levels could be made before the turnaround commences. Also, as I mentioned yesterday the target area using Elliott Wave coincides with a good zone of support. Below $28.41 means the analysis is incorrect.

Thanks for that view Porper as I find EW a fascinating topic always good to see how others mark up their charts using this concept.
As far as my $26 goes it was more to do with some price tables I had made up using previous ranges and had found $31,$29 and $26 as my strongest levels using my monthly chart and not so much to do with the EW.

and

Rimtas I am not too sure of your meaning as I am still on my " L" PLATES as far as understanding the total concept of EW so will need to do some more reading and research.

Thanks for the feedback all!!

 

[rimtas]

Below $28.41 means the analysis is incorrect.

Your analysis is incorrect now already. Wave C can not be an overlapping 7 wave structure, because it is the third wave. And this is especially true in an expanding flat scenario (in other flats wave C can be an ending diagonal).

Also, welcome to the real world of expanding flats, where wave C can be far much beyond of 1,618 of wave A. A good example was an 1987 Dow crash, or 2011 Apr Dow correction, examples here are endless...

You can stick with Elliott Fibonacci guidelines which he outlined from his observations in the mid of last century, or you can try to spot how waves are forming by yourself. You have what Elliott didn't-a state of the art charting software, presenting market as a fractal in different time frames at the touch of the button. You can spot the whole EW with all the rules and guidelines just in one day, looking at the one minute chart.


Back to WOW topic-if this is wave C, it should be a normal Impulse wave consisting of 5 waves down. It can bottom anywhere right to the bottom of 23.18. The wave structure is the key here. The most recent dive can be characterized best as the "Point of recognition", e.a the 3 of 3, or to put it simply, just the middle of wave C. It could take another half year for WOW to finish the pattern, with a series of fourths and fives ahead.
I'd be very surprised if WOW finds a bottom above 30 mark (in the light of Expanding Flat Scenario that we are tracking).

 

[McCoy Pauley]

Adele Ferguson wrote a very gloomy article about WOW that's been published in today's AFR here: http://www.afr.com/p/business/companies/project_oxygen_sucks_life_out_of_TgMTCAIrKo2jTKNU3bH1PP

Essential points:

• Had WOW not gone into the Masters' JV with Lowes, WOW could have concentrate on maximising the performance of the food & liquor divisions and crush Coles before its revival took effect;
• Grant O'Brien may not have much leeway should WOW fail to meet guidance for growth;
• Remuneration at WES in relation to performance more in line with shareholder expectations than at WOW;
• WOW is losing the PR battle about its prices, as many consumers see products sold by WOW costing more than at its competitors;
• WOW's stock and inventory management systems are falling behind.

 

[sptrawler]

Adele Ferguson wrote a very gloomy article about WOW that's been published in today's AFR here: http://www.afr.com/p/business/companies/project_oxygen_sucks_life_out_of_TgMTCAIrKo2jTKNU3bH1PP

Essential points:

• Had WOW not gone into the Masters' JV with Lowes, WOW could have concentrate on maximising the performance of the food & liquor divisions and crush Coles before its revival took effect;
• Grant O'Brien may not have much leeway should WOW fail to meet guidance for growth;
• Remuneration at WES in relation to performance more in line with shareholder expectations than at WOW;
• WOW is losing the PR battle about its prices, as many consumers see products sold by WOW costing more than at its competitors;
• WOW's stock and inventory management systems are falling behind.

Yes WOW seems to have lost its way, in some ways it appears to have drifted into the old pre Westfarmers Coles model.

I bought in at the initial float, then sold out at a later date. Since then I keep looking for an entry point, but then think why not WES, WOW seem to be playing catch up footy.

With Masters, it doesn't have seem to hit the market place in any given spot, it appears to be trying to be everything for everyone, therefore not actually appealing to any given sector.

We tend to go there as a last resort, not as a first place to check. It is a great shop, but the hardware isn't better than Bunnings, White goods aren't better than Harvey's or Retra vision.
Has a big identity problem.IMO

It will be interesting, if down the track if WOW, sell off Masters and Lowes buys them.

 

[McCoy Pauley]

Found a copy of Adele's article which isn't behind the AFR paywall.

http://www.theage.com.au/business/r...ves-supermarkets-gasping-20141124-11skc7.html

 

[nulla nulla]

Found a copy of Adele's article which isn't behind the AFR paywall.

http://www.theage.com.au/business/r...ves-supermarkets-gasping-20141124-11skc7.html

Thanks for the link McCoy Pauley. I suspect in all the "Coles" versus "Woolworths" hype that there are three (3) aspects of Woolworths that are either overlooked or deliberately down played:

1. The Woolworths annual sales and profit is bigger than that of Coles;
2. Woolworths profit continues to grow, while Coles is also growing at a slightly higher rate the percentage of growth is determined off a lower base level than that of Woolworths; and
3. As pointed out in the article, over the last three (3) years Woolworths have increased their distribution by 56.7%.

There seems to be a popular trend among the analysts and newspaper reporters to discredit the Woolworths results, year in year out, and invariably when they trumpet their gloom and doom message the share price gets slammed. However, the share price always recovers. It seems that the clued up investors are selling to the bargain hunters. Time will tell who is right. As always do your own research and good luck.

 

[rimtas]

There seems to be a popular trend among the analysts and newspaper reporters to discredit the Woolworths results, year in year out, and invariably when they trumpet their gloom and doom message the share price gets slammed.

You are very close with this, but I can ad for a clrearer picture.

The context of the article itself is not important. Most important is the time when it was published.
After the stock was hit by a third wave (the strongest one in a sequence), analysts and reporters felt that their bearish view will be accepted as the explanation of the reason why WOW is falling. Their job is to explain yesterday's moves.

More and more are joining the crowd and they feel that they are right-downgrades, sell recomendations, gloom and doom articles and so on. This is an unconcious shared behaviour, where to be different means "death". So expect even more bearish views, analysis and articles about how WOW is "geting toasted".

Third waves are the waves when the trend is clear, and at the bottom of it, fundamentals usually colapse in response. Just the degree of this wave is not very large, so to what extent they will colapse will be seen, but it will be a good source for analysts to predict even more falls at the nadir.

In reality nothing changed with company whatsoever-WOW situation is not much different from that 7 months ago when the stock was at All Time Highs and analysts and reporters were seeing a bright future and higher prices ahead. What changed is the views of market participants, and they changed only because of the price movement down.

The quantity of bearish articles is fluctuating along with the trend, and when the WOW finds a bottom and rally next year, they just disapear. So socionomicaly it is normal to feel bearish at this stage, especialy for people who don't have much knowlidge about social science related to the stock market.

There are no any conspiracy or "trying to push down the price with gloomy articles". No one can push against the market in any direction, it always recovers to the direction of the main trend.

The price most likely will hit the bottom of a third wave (circled) in the coming weeks and fourth wave rally will start. Expect more articles "with the hope" at this stage.

 

[galumay]

.....It seems that the clued up investors are selling to the bargain hunters. Time will tell who is right. As always do your own research and good luck.

I agree with your comments there, its pretty much the case with shares in general, so few people are really investors and very few have the ability or discipline to research and understand the fundamentals of a company's business so they just trade in and out of the market on emotional triggers.

 

[Julia]

I agree with your comments there, its pretty much the case with shares in general, so few people are really investors and very few have the ability or discipline to research and understand the fundamentals of a company's business so they just trade in and out of the market on emotional triggers.

Why would you assume people 'trade in and out of the market on emotional triggers'?
Most traders are not driven by emotions at all.
You do not have to engage in complicated fundamental research to successfully make money which, after all, is presumably the reason you are in the market.

 

[galumay]

Why would you assume people 'trade in and out of the market on emotional triggers'?

Not sure how you could come to any other conclusion, if it wasnt emotions that ran the markets then companies would actually be priced at their value and you would never see an event like the GFC or a boom like the tech boom!

 

[The Falcon]

That's pretty much it...fear of missing out, then fear of obliteration. Chancellors "Devil take the hindmost" is a great read on the nature of markets and how poorly equipped us humans are to deal with them. It has always been so.

The best battle plans seldom survive first contact with the enemy.

 

[rimtas]

That's right Falcon... and I can add this- Despite the rigorous analysis and understanding the fundamentals of the company, once you are in the market, logic no longer applies. You are at the mercy of forces that do not know your analysis and understanding, and even you. Usually the limbic system takes over from the point of entry and only the fear of loosing and greed of making more exists. Fundamentals and analysis are left somewhere in the mist of deep corner in your brain...


By the way-today probably was formed the top of wave (iv) at WOW.