Nicholas Forsyth

This month the ASX200 is up 1.8% whereas the large supermarkets are up an impressive 4.6%! But it is a tale of very different performance when we look closer. Focusing on the two big players in the sector we can see that Wesfarmers is up 10.3% but Woolworths is actually down 1.1% - which poses a few questions e.g. Is Woolworths poised to catch up or does it remain in trouble? Market Matters recommended selling WOW when it was ~$34, prior to the majority of its 43% fall, using the UK market as a leading indicator. When we look at the large UK supermarkets like Tesco and Sainsbury's we have seen minor bounces in recent weeks but clearly no change in the negative trend. While in the short term Tesco looks set for a further 10% bounce following its massive 72% collapse, the technical indicator is a trading opportunity, not an investment signal. Let’s move on and focus on WES and WOW individually. (VIEW LINK)


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