Dubai World debt moratorium issues sparked fears of sovereign defaults similar to Argentina’s from 2001 and sent global stock markets into a tizzy. The ASX lost 2.9% Friday and all four of Australia’s major banks issued statements discussing their exposure to Dubai World’s debt, although Commonwealth Bank did not detail the extent of that exposure. Pundits wondered if the precipitant drop wasn’t indicative of the precariousness of investor confidence at these bull rally levels.

Next week appears quieter, barring additional foundational shocks, as earnings season wraps up and markets look elsewhere for stimulus. Possible shakers next week include:

Monday, 30 November: Cooper Energy (COE) carries no debt and doubled assets by value between 2007 and 2008. In the dark days of 2009, the company successfully increased cash reserves by 45%. However, 2009 revenues fell 7.5% y/y, net income recorded a loss of $2.82 million, and in October the company decided against paying a dividend. Despite recent spikes through resistance at 0.50, that level has held since June 2008.

Thursday, 3 December: Nufarm (NUF) is currently in discussions with China’s Sinochem regarding an outbound M&A deal. The offer came calling after Nufarm issued three profit warnings, caused by a slump in the price of their primary product, the herbicide glyphosate. S&P has stated that Nufarm’s rating is on watch negative pending the outcome of the Sinochem discussions, with a downgrade likely if the takeover bid falls through, due to a perceived weakening of Nufarm’s business model. Strong resistance has lodged at the 12.25 level since mid June.

Meanwhile, Fortescue Metals Group (FMG) on previous analysis had touched and respected its strong bullish trendline, and was anticipated to repeat the procedure while also respecting support at 3.25. It did both, as shown on the chart, below:

At this point, yet another retraction back to the uptrend seems in the cards, and will fill in the gap between 3.90 and 4.01 left in November.

In the longer term, FMG can be expected to continue that strong uptrend. On its way down in late 2008, the stock left a gap between 5.59 and 5.31, that still requires filling, and several more passes along the bullish trendline could see that milestone completed:

technical analysis by Craig Liles

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