What the Share Price of Boral and Adelaide Brighton Ltd are Telling You about the Australian Economy

What does Adelaide Brighton and Boral Ltd do?

Adelaide Brighton Ltd [ASX:ABC] and Boral Ltd [ASX:BLD] supply raw materials and cement to Australia’s construction and infrastructure industries. There are some minor differences between the two, but I profile these two stocks together because there is some overlay and symmetry in what they do. Put together they give a stronger indication of economic conditions.

This is a follow up to a posting I made over four months ago now on March 26, 2015, which you can see here.

I am on record in that March posting as saying;

‘Looking forward, we could anticipate improvement in construction figures and continued infrastructure activity…and for this to extend through 2015 and beyond, as this sector still has several good years ahead of it yet.’

That’s interesting, but what is the chart telling us now?

What do the charts look like now?

I find it helpful to bring up a chart. This time I profile the monthly chart of ABC and BLD combined.

Adelaide Boral Graph 2

Source: STEX

Adelaide Brighton is in red, and Boral is in green.

You can see that from the start of 2013, there has been quite a symmetry between the two share prices.

The charts are telling you that earnings are strong and revenues are increasing. Sale volumes of raw construction materials and cement must be up and construction activity must be continuing at a healthy rate.

From the date of that posting I refer to in March, both companies retraced, but made a higher low on the monthly chart. (Stocks do not go up in straight lines.) Importantly they’ve both gone on to break over former tops made earlier in the year and make new highs.

Just as forecast, this is extending through 2015 and beyond.

What now for ABC and BLD shares?

Both these stocks are making new highs. We could expect news of growing revenues and profits. But I think you are seeing this now?

More broadly for the economy, we might see robust infrastructure and construction figures to come out in the months following.

You may be reading in the financial press Australian recession, but whilst BLD and ABC continue to make new highs, it’s simply not going to happen.

At Cycles, Trends and Forecasts, we knew these companies would move. This is all forecast in our 18 year real estate clock. And the charts are simply confirming that, before you read about it in the papers. Profitable information to have, isn’t it?

They say it can’t be done, that you can’t forecast the economy. But you can, when you have knowledge of the cycle. That knowledge has been distilled into our 18 year real estate clock, which you can find here. It has quite a long history of repeating and this current cycle has not started out any different. I think you can see, as a share trader you must have this knowledge. You are at a substantial disadvantage without it.
Terence Duffy,
Research Analyst, Cycles, Trends and Forecasts

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Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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