Australian October jobs data pleasantly surprised although the details remain worrisome, with most jobs gained being part-time and the unemployment rate rising to 5.8%. Next week’s wages data should guide inflation expectations and subsequent RBA interest rate decisions.

Possible shakers next week include:

Monday, 16 November: OneSteel (OST) in August beat low-ball profit expectations of $200M with $215M, down 32% y/y, but also announced cost-cutting measures including staff cuts and sales of some iron ore production. In October the CEO reported marginally increasing demand but conditions remained challenging. Only fireworks will break strong resistance at 3.20 and beyond that 3.40.

Tuesday, 17 November: Galaxy Resources (GXY) recently obtained private funding from China to fully finance development of a new lithium processing plant in China and a downstream ore mine in southwestern Australia. Perhaps this can rein in surging operating expenses, which helped pull GXY from above 2.00 to current 1.60.

Wednesday, 18 November: Australian Worldwide Exploration (AWE) in August expected production to fall off in 2010 due to field decline; however, since then AWE has upped their ownership of the BassGas project from 42.5% to 50%. Revenue from the previous quarter rose 25% on sales from oil inventory. AWE has formed a series of lower highs since early June and could use some good news.

Emeco Holdings (EHL) in August guided net profits in line with expectations at $46–53 million, declaring a final dividend of 0.02. The stock EHL seems stuck just beneath 0.90.

Macarthur Coal (MCC) pleasantly surprised investors in August with a 132% jump in annual net profits. The company recently raised funds through a share offer to develop a new Queensland mine. MCC is also stuck, rolling between 8.00 and 10.00.

Thursday, 19 November: Goodman Fielder (GFF) in August underperformed in earnings and revenue, but is expected to bounce back with improved margins. A good result could break the short-term downtrend in place since 12 October.

Meanwhile, BlueScope Steel on initial analysis had broken a strong downtrend but remained locked within a tightening triangle formation, beneath resistance at 3.40 and a bullish trendline, as shown below:

BSL fell back to the uptrend, as expected; however, rather than rising again to the resistance level, it broke beneath the trendline on 29 October, initiating a new pattern, below:

Now, in addition to resistance at 3.40, a support level at 2.85 has been established. Look for the stock BSL to consolidate, rising to resistance then falling to support, between these two levels in the coming weeks.

Technical analysis by Craig Liles

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