WOW - Woolworths Group

[oldblue]

Yes, not my idea of a good bet at the moment.

Apart from the fundamentals, technically, and I'm no expert at this, WOW's chart doesn't look at all promising. SP in a downtrend, relative strength at a low point.

WOW is one of our best companies but not good buying at present, IMO.

 

[jonojpsg]

That is not how you should use CFDs!! You've just put on a naked $50K position - how big is this position relative to your account? (Ignore what I just said if your account is over a million).

Last year during the GFC they are well supported by government stimulus and not threatened by a weak Coles. There weren't even Masterchef on TV. The fundamentals are somewhat different (poorer) for WOW now imo.

-Deflating food price as a result of price competition from Coles.
-Renewed competition from Coles (their new format stores are nice...) and also Metcash (IGAs).
- Dicksmiths / Big W etc not really getting anywhere.
- Huge capital requirement on rollout of hardware stores to take on Bunnings.

Good luck.

All good points. I agree the MasterChef phenomenon being aligned with Coles is definitely a downer for WW no doubt. Food deflation yes and will have to wait and see how that pans out.

Te $50k naked position - well, yep, but I explained how I was trading it - my account is definitely NOT $1m, would love it to be but am happy to wear the risk of $1200 for a potential gain of $2400 given the weight of the channel lends itself to a rebound back towards $27.

Agree trend is down, but that's always how channels work is it not, price trends down until it hits the base of the channel then rebounds and heads back to the top? At least that's my interpretation

Anyway, we'll wait and see...will keep you posted

 

[sptrawler]

I don't have WOW, but did buy in at $2.40, what a great company. However I do feel they have "dropped the ball", easy to do when you are hammering an inept opposition. The problem with being on top of the heap, is the competition knows what it has to beat and I think WES is up to the job.
My thoughts are WOW will trend back to a P.E of 12 -15, which one would expect in a competitive market place for consumer staples.
I think the days of WOW commanding a PE of 26 and a dividend of 3% are over. It's hard work from here.

 

[So_Cynical]

Agree trend is down, but that's always how channels work is it not, price trends down until it hits the base of the channel then rebounds and heads back to the top? At least that's my interpretation

That's how its worked for me...many many stocks are ranging and its easy money just trading the range and buying the bottom of the range with blind faith, don't suit the trendy's of course but each to there own...now having said all that i still have to agree with SKC a little and add to his list of negatives.

Aldi and Costco...2 very big negatives for woolies...personally i would of waited for the SP to fall a little below the trend line.

 

[skc]

All good points. I agree the MasterChef phenomenon being aligned with Coles is definitely a downer for WW no doubt. Food deflation yes and will have to wait and see how that pans out.

Te $50k naked position - well, yep, but I explained how I was trading it - my account is definitely NOT $1m, would love it to be but am happy to wear the risk of $1200 for a potential gain of $2400 given the weight of the channel lends itself to a rebound back towards $27.

Agree trend is down, but that's always how channels work is it not, price trends down until it hits the base of the channel then rebounds and heads back to the top? At least that's my interpretation

Anyway, we'll wait and see...will keep you posted

That's how channel works but I'd prefer trading in the direction of the channel - i.e. short at the top of the channel rather than buy at the bottom.

It does seem like you are fully prepared about the risk, and the chance of WOW gapping significantly lower seems small enough. But for general prudence in trading, keep your position size at some maximum percent of your total account may be a good rule to set up.

Good luck with the trade.

 

[The_Snowman]

I'm in at 25.80 (2000 CFDs) - seems like an opportune moment to buy with SP at the low end of the trading range that has persisted for the last two years since the GFC kicked in. Expecting a steady rise back to the middle of the range around 27 over the next month or two.

Tis a reasonable risk-reward with the 20:1 leverage that CFDs give. For a deposit of around $1200 I get exposure to maybe $2400 of reward (assuming a bounce back to $27) with a risk of maybe $1200 with a drop to the LOW of last year $25.19 (which is where I put my stop). RR ratio of 2:1.

Personally can't see it getting past that given the defensive nature of the company - if the market tanks, people will shift back to it, if it heads up, WOW gets dragged with it. Can't lose hey

PS looking forward to getting spanked for that last comment

Here's wishing you luck, this might help you some, but overall you may be at the mercy of greater market sentiment if indexes decide to head for an October low.....

Chart is showing a typical A-B-C correction to the previous swing high, giving entry point and target for you also notice the previous Volume Spike - take the profit at the target or trail a tighter stop if it goes to infinity and beyond

 

[The_Snowman]

I'm in at 25.80 (2000 CFDs) - seems like an opportune moment to buy with SP at the low end of the trading range that has persisted for the last two years since the GFC kicked in. Expecting a steady rise back to the middle of the range around 27 over the next month or two.

Tis a reasonable risk-reward with the 20:1 leverage that CFDs give. For a deposit of around $1200 I get exposure to maybe $2400 of reward (assuming a bounce back to $27) with a risk of maybe $1200 with a drop to the LOW of last year $25.19 (which is where I put my stop). RR ratio of 2:1.

Personally can't see it getting past that given the defensive nature of the company - if the market tanks, people will shift back to it, if it heads up, WOW gets dragged with it. Can't lose hey

PS looking forward to getting spanked for that last comment

Feeling better today? and not a bad day in New York even after the NFP figures released, so more confidence for next week..... Bring your stop to breakeven, a WIN - NO LOSE situation, and let her run, possibly better than your 2 to 1 estimate

 

[nulla nulla]

MACD chart as at 06-08-10 looks good. I'm looking for further recoveries as woolworths announces their profit and final dividend.






The RSI chart indicates the share price is gapping up above the average and traders would need to be wary of any sudden retrace. A tight trailing stop loss to lock in any profits would be a good idea.

 

[Tukker]

MACD chart as at 06-08-10 looks good. I'm looking for further recoveries as woolworths announces their profit and final dividend.

View attachment 38278




The RSI chart indicates the share price is gapping up above the average and traders would need to be wary of any sudden retrace. A tight trailing stop loss to lock in any profits would be a good idea.

View attachment 38279

This looks more like a better short position to me.

The med term trend is down and barring any significant news I fail to see evidence to the contra. Recent recovery is typical to previous attempts signaled by divergence, which ended up in a continuation of the trend. I would say its a 75% chance of a retraction come monday especially with the US market weakness on Friday.

Do well by your stops and good luck to you.

 

[jonojpsg]

Feeling better today? and not a bad day in New York even after the NFP figures released, so more confidence for next week..... Bring your stop to breakeven, a WIN - NO LOSE situation, and let her run, possibly better than your 2 to 1 estimate

Am indeed thanks snowman and have done just what you suggested, although must admit I snuck the stop a lil higher than breakeven, just to make sure I have the psychological nicety of coming out with a profit even if it gets hit

 

[nulla nulla]

One week on and wow traded in the range $26.30 - $26.70 with increasing volumes. The macd chart shows wow gapping above the moving average.
Hard to work out if wow is lifting:
1. on purchases by investors buying "defensive" stocks where others were falling through the week;
2. investors buying in, seeing the curent price as oversold; or
3. the annual report is due for release and the dividend will be announced.

Personally, i'm looking for a break out above $27.00. As always, do your own research.

 

[Huitzii]

Im watching WOW closely but im not convinced that its heading north from my following T/A chart.
ATM its hovering sideways just above the $26,25 resistance, from here it could break north toward the $27.3 higher resistance or it could just as likely break south toward the $25.5 lower resistance.
10 day average is climbing while the 68 and 90 day average are still slightly heading south.
MACD is positive.
IMHO the next few trading days will decide where its heading.
I will wait and see what the market says and see if it presents me with a definite direction.
DYOR

 

[skc]

WOW jumping 7% on open thanks to the result. I really don't understand how that came about. Can't the analysts add up 4 quarters of sales report and work out with a reasonable degree of accuracy on what WOW's full year profit should be? When was the last time WOW "surprised" either way on their results.

Super profit tax on supermarkets anyone?

I'm in at 25.80 (2000 CFDs) - seems like an opportune moment to buy with SP at the low end of the trading range that has persisted for the last two years since the GFC kicked in. Expecting a steady rise back to the middle of the range around 27 over the next month or two.

This trade closed yet?

 

[skc]

Let me take that all back. The spike up was due to the complicated off-market buy back arranagement offered. Essentially some free tax loss credits as the buy back price is made up of capital return and fully franked dividends. Would have been a perfect short on the open nonetheless.

 

[noirua]

Let me take that all back. The spike up was due to the complicated off-market buy back arranagement offered. Essentially some free tax loss credits as the buy back price is made up of capital return and fully franked dividends. Would have been a perfect short on the open nonetheless.

Yes! Jumping up and down like a minnow mining stock are Woolworths and hopefully we'll see my $30 target reached about 6 months later than I thought. A company generating a lot of cash as the present buyback shows, though it does seem that WOW can't see where else to invest the money. Staying firmly in Australasia appears to be the current policy - and why not! - with a fast growing Aussie population.

 

[Huitzii]

Regardless of the buyback it was the largest 1 day gain that WOW has seen is quite some time...it might wake up the button pushers

 

[nulla nulla]

Just in case you missed it, she went...wow wow wow........bang!!



It was certainly looking for a break out. Curious to see what it can do from here. Profit forecasts are good but i find it hard to get bullish on on share while the rest of the world (and markets) are suffering from gloom and doom disease.

 

[noirua]

Regardless of the buyback it was the largest 1 day gain that WOW has seen is quite some time...it might wake up the button pushers

Woolworths are doing well despite what some would like us to believe. Held back by a price war? - Yes, just a little.
Probably, imho, should be on a 3.5% yield as markets move into Spring. Points to a target of $32 or there abouts.

What more can you say about Woolworths except, "WOW".

 

[nulla nulla]

It will be interesting to see if it gets oversold when it goes exdiv. Might provide a re-entry level for those that trade woolworths.

 

[nulla nulla]

Testing the recent highs, wow continues to climb on the strength of their results (and probably the forthcoming dividend).