Technical analysis of global indices please

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Question asked 14/05/2022

Technical analysis of global indices please

Hi James & Team, 1) What would you consider capitulation levels for the US & Australian markets? 2)Your view on Drone shield DRO. Senior management has plenty of skin in the company, especially their employee options, exercisable at $0.65 per option, expiring on 30 June 2023. Rightly or wrongly, this is the price target I am aiming for! Does it make sense? 3) REA has fallen well below your buy-in price of around $125? Is now the time to step in? Thanks & regards

Answer

Hi Sidney,

Obviously there’s lots of questions here so please excuse the brevity towards each:

1 – Capitulation is a very relative term but in the ASX200 potentially a close under 6700 and the US S&P500 sub 3550.

2 – This $90mn drone detection business DroneShield (DRO) has just fallen over 30% in a few days – arguably a great example of capitulation! I can see your logic but it feels extremely optimistic at this point in time, MM would call the stock too hard at this stage. While employee options are an aligning mechanism, I wouldn’t be using the strike price as my target for the stock.

3 – REA like virtually all growth names has been sold-off far harder than we expected, we do like REA around $110 but we would be leaving $$’s to dollar cost average into further selling pressure.

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MSCI Global World Index (MXWO)

LAST UPDATED 13/05/2022 07:10

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