Time to buck the trend and grab some JB Hi-Fi?

Michael Gable

Fairmont Equities

We looked at JB Hi-Fi (JBH) last year here in Livewire we and didn’t like the way the chart looked. We expected the shares to fall towards support near $22 and advised investors to stay away. Since our note, Amazon has been in the papers nearly every day and investors headed for the exit. The stock is now down over 15% since our warning. In comparison, the ASX200 has climbed higher and higher during that time. With the stock hitting our downside target, is it time to go against the Amazon hysteria and step back into JBH?

Two weeks ago we saw it trade intraday at $21.92. Now we have seen JBH bounce from that level. This area sees JBH trade on trendline support and it is also the 38.2% retracement of the 2012 - 2016 rally. JBH should continue to head higher from here, but downside risks remain.

Any potential trade here is not for the faint-hearted. We would look to put a stop near $21. If JBH can turn higher here, then expect resistance to come in near $25.50 and then up at $27.50.

 

Any advice is general only. Fairmont Equities uniquely combines both fundamental and technical analysis. Visit our website for a free trial to our research, request a free portfolio review, and to access our free blog and educational videos.


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Michael Gable
Managing Director
Fairmont Equities

Michael Gable is managing director of Fairmont Equities. We are a small boutique advisory that uniquely combines both fundamental and technical analysis. As a result, our analysis is featured regularly in the finance media such as the Australian...

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