Acampora: Technically Favorable ADRs
08/29/2003 12:00 am EST
Ralph Acampora has the uncanny knack of sifting through complex technical data and presenting a clear and understandable view. He recently looked at the leading 100 global stocks; he feels that their technical position may suggest a "new global cyclical bull market". Here, the director of technical research for Prudential Securities, offers six examples of the favorable patterns he sees among various ADRs.
"The Standard & Poor’s Global 100 Index, our proxy for foreign equities, represents the price action of the 100 largest companies around the world whose business is global in nature. This barometer represents a collaborative effort between the New York, Tokyo, and Deutsche stock exchanges, along with the people at Standard & Poor’s. Its major downtrend line was broken earlier this year after successfully testing the same low three times (a triple bottom). We interpret this entire process as the early stages of a new global cyclical bull market.
"BHP Billiton Ltd. (BHP NYSE), a diversified Australian resources company, is an example of a large-cap ADR that is trading within the confines of a major uptrend. An extensive period of accumulation is evident in the $10-$12 area, which enables us to calculate an eventual upside target to the $20 area. Violation of the current uptrend would suggest a retest of the recent breakout in the $11.50-$12 area.
"AXA (AXA NYSE), a financial services firm, appears poised for an upside breakout. AXA is a large-cap ADR that is still under consolidation, and to date, appears to be taking the shape of a major base formation. If we are correct and AXA breaks above resistance in the $16-$17 area, it would give us an objective to the low to mid-$20s. Support comes into play at $16 and $14.50.
"Electrolux (ELUX NASDAQ), the appliance maker, is expected to move higher. This is an example of a mid-cap ADR that appears to be in a powerful uptrend. The slow but impressive price action reveals support in the $40 area; we anticipate further stabilization at current levels and then another advance to the $50 area using a swing rule methodology to calculate our target. Support levels are: $41, $37, and $35.
"Amvescap Plc (AVZ NYSE), a London-based investment management group, is a mid-cap ADR that is consolidating within a major base formation. Amvescap is about to complete a significant bottom. If allowed to continue in this trading pattern, AVZ shares could ultimately rally to the low to mid-$20 area.
"James Hardie Industries (JHX NYSE), a maker of fiber cement products used in external construction, is in a major uptrend. This is a small-cap ADR that is registering new highs in price. This aggressive behavior is impressive to us and should now afford upside potential to the $30 area. Good support is seen in the mid-$20s.
"Qiagen NV (QGENF NASDAQ), a Netherlands-based company, is a small-cap ADR that is trading within the confines of a neutral trend. The stock of this biotechnology firm is in the process of completing a major bottom pattern. This price activity is reminiscent of a base pattern that could set the stage for a meaningful move to the $15 area."