The Aussie 200 index is approaching the top of the medium term down channel. Below are ten stocks that could be setting up for a sell-off.
Today’s 1.7% rise brings it within 1% of the trend line – and means the index has rallied more than 11% in ten trading days, illustrated on the chart from CMC’s Tracker platform below:
While markets have been less pessimistic about the debt situations in Europe and the US over the last two weeks, we do not have any lasting solutions yet. Coupled with the picture above, traders expecting a sideways or downward market may be looking for suitable stocks to go short, with a short term trading opportunity in mind.
This table shows ten stocks in the Aussie 200 that are currently outside their upper Bollinger Band – implying their recent price rises may have put them in overbought territory:
| Stock | Code | Close | SD |
| Virgin Blue | VBA | $0.355 | 2.9 |
| REA Group | REA | $12.32 | 2.8 |
| 7 West Media | SWM | $3.08 | 2.6 |
| Graincorp | GNC | $7.85 | 2.5 |
| Tabcorp | TAH | $2.81 | 2.4 |
| Coalspur Mines | CPL | $1.73 | 2.3 |
| Echo Ent | EGP | $3.83 | 2.3 |
| Aust Infra | AIX | $1.925 | 2.2 |
| Transurban | TCL | $5.50 | 2.1 |
| Pharmaxis | PXS | $0.94 | 2.0 |
The “SD” column is the number of standard deviations recent returns are from their average, remembering that Bollinger Bands are normally 2 SDs. While every trader will have to decide for themselves if these represent trading opportunities, this may be a good place to start looking for short trades.
Of course, an index move above the trend line (currently at 4302), and especially a close above that level, would see many traders covering any shorts.
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