While some share market bulls are getting excited about a “double-bottom” formation in the Australia 200 index, more diligent investors with a technical bent may have discovered a “triple bottom” in ANZ. Combined with the announcement of a succession plan for CEO Mike Smith, and a propensity to gap fill, ANZ should be on the radar of every investor who is yet to fill their boots with Australian bank stocks.
Assuming zero growth in dividends, ANZ’s dividend yield with franking at $27.60 is 9.3%, and it has a trailing P/E ratio of 10x. Unless you fear a housing market meltdown, these numbers are compelling in a blue chip stock. Investment metrics? Tick.
Now, have a look at the daily chart. Note the gaps in share price between one close and the next day’s opening (circled). Some shares are gap fillers, some are not. The reasons are complex, but the evidence is on the chart. ANZ is a gap filler. Sometimes the price will retrace immediately (purple circles) and in other cases it may take weeks or months (green circles).
Now, take a look at the mack daddy of a gap formed on August 4 between $32.50 and $29.97. Filling this gap gives a target of $32.50, compared to current trading just above the triple bounce off $26.45.
Trade, invest, or both?