Traders decided to take profits off the table earlier in the week, after the staggering surge higher last week, as the EU leaders clarified their “comprehensive” plans to address the eurozone debt crisis. Volatility initially eased, but pushed higher as the week progressed, as the eurozone debt plan implementation issues surfaced.

There was a sharp sell-off triggered by the Greek PM after he said he would force a referendum over the proposed EU bailout plan. However the G-20 summit leaders made it clear to Greece that they must accept the austerity measures in order to quality for any further bailout funds. The Greek cabinet has since backed down from calling for a referendum.

Central banks globally have been accommodating with the US Fed leaving rates on hold, the ECB surprisingly cutting interest rates to 1.25% overnight and in Australia the RBA cut interest rates by 25 basis points to 4.25% this week. There are still concerns over financials stocks particularly those with exposure to European debt, after the world’s biggest futures and derivatives broker filed for bankruptcy this week.

The markets appear to want to push higher, as many of the global markets are finding support around their 50 day moving averages, having pulled back earlier in the week. The November-December period is typically good for stocks, so if the eurozone debt situation can settle, then we should see some Christmas cheer. However if this week is a sign of the times, then the implementation issues surrounding the EU bailout plans could provide added volatility during this period.

The US dollar has been undergoing some huge volatility of late and this has been affecting commodities prices. The major metals have held on to recent gains with gold up at $US1,766 per ounce, Crude oil at $US95 per barrel and copper at $3.58 per pound.

Our View For Australia

As we suggested last week the S&P/ASX 200 found resistance at its 200 day moving average and it sold down all the way down to its 50 day moving average which is currently acting as support. In the Analyst’s Eye we talk about how the “bull trap” trade setup .

Aussie traders have been held hostage to what is happening in Europe, particularly in Greece. However the markets really look like they want to push on higher in to the end of the year. The RBA has cuts interest rates for the first time since April 2009, reducing rates by 25 basis points to 4.25% this week, as we anticipated. Retail sales grew for the third straight month in September up 0.4 percent, following a rise of 0.6 percent in August and providing a sign of optimism for the domestic economy. This should help retailers as we move into the Christmas shopping period.

The banks have completed their annual reporting with ANZ Bank has increasing its full-year profit by 19 percent to $5.36 billion. Westpac reported earlier in the week saying that its full-year cash earnings over $6.3 billion, while last week NAB said its cash profit came in at $5.5 billion. The Commonwealth Bank, which reports its results to the end of June, said in August that its cash profit totaled $6.8 billion. In sum, the cash profits totaled about $24.3 billion. Improving commodity prices will also help our miners.

After another struggle between the bulls and the bears this week the bulls appear to be retaining control, though they need to push the markets through, and hold above the 200 day moving average in order to confirm their dominance. The Aussie market has found support around its 50 day moving average, which sits around 4150, and must breach the resistance around its 200 day moving average, which sits around 4,410 in order to confirm its positive momentum.

Investors should be looking to utilise options strategies to protect their profits in this type of market. Investors have given their vote of approval on the eurozone bank rescue package and the proposals for the extension of the EFSF bailout package, it is a matter of overcoming the implementation issues going forward.

Remain attuned to the news from overseas particularly from China, Germany and the US regarding their economic growth and debt issues. Monitor the performance of the US dollar for a guide to the future direction of commodities and equities prices.

The S&P/ASX 200 is currently trading at 4275 having found support again around the 4150 level this week. Key levels for the index next week will be 4150 and 4410, with 4300 the key pivot level. Be prepared to use options to protect your profits and reduce your risk. Expect to see volatility to remain elevated as the market participants look for some confirmation of the near-term market breakout.

Use options strategies to reduce your risk in these volatile times. The MDS Financial Advisory Services team can help with this and we have also discussed some of the strategies in our Analyst’s Eye Articles recently. Call me on 1300 610 024 for further information.

We regularly update you on trade recommendations so for Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research.

By Michael Hevern
MDS Trading Desk

Globally financial stocks have surged, after the EU leaders agreed to deliver their “comprehensive” bailout plan. The plan includes private investors taking a “voluntary” 50% write-down on sovereign Greek bonds, the size of the eurozone EFSF bailout fund will be increased to about $US1.4 trillion (an almost fivefold increase), and Greece will aim to reduce its debt to 120% of gross domestic product (GDP) by 2020. The bulls cheered an agreement reached by European leaders on a plan to resolve the eurozone’s debt crisis.

US markets have surged higher this week, past key resistance levels and are on track to produce their best October performance since 1974. The tech sector has underperformed after disappointing earnings from the likes of Amazon. The earnings reporting season saw 40% of the S&P500 companies reporting, and there were no really shocking reports, with the exception of Netflix which plunged after disappointing.

Europe investors have been anxious over the sovereign debt situation, but following the progress at the EU summit traders have jumped back into equities and commodities. EU leaders delivered the details of the EFSF and bank rescue plans, and the Chinese are reported to have said they will back the rescue plans. The eurozone summit has committed to a EUR110 billion bank rescue package and have now agreed to a $US1.4 trillion EFSF bailout package. Investors are cheering their leaders “comprehensive” plan.

Commodities rebounded sharply this week in a “risk on” play. Copper prices rebounded over 15% from last week’s lows, while Crude-oil markets broke above $US94 level for the first time in three months and almost hit $US95 per barrel. Gold prices have surged this week, up nearly 10% from last week’s lows, as the mass liquidation of funds appears to have come to an end.

Asian traders have been reacting to what is happening in Europe and the US as well, with growth sensitive stocks recovering on the back of higher commodities prices. The Chinese market has bounced off 2-year lows and has broken through a downtrend line which has been in place since early July. The Chinese annualised GDP figures came in at 9.1%, down from 9.5% in the previous quarter.

Our View For Australia

The Aussie market has traded sideways for the past few weeks, but the rampaging bulls have gained control, pushing the market past recent resistance levels, following on from the positive news out of the EU summit. The miners have recovered from their pullback last week, as commodities rebounded sharply, while the banks continue to hold on to their recent gains as we move into their reporting and dividend season. The S&P/ASX 200 is trading past the upper level of its trading range for the month and it now appears the 200 day moving average is acting as resistance.

Another positive for our markets could be an interest rate cut next week. The RBA has set the stage for an interest rate cut before the end of the year. Analysts expect a cut of 25 basis points at the next meeting on Melbourne Cup day in November. According Credit Suisse, there is now a 100 percent market expectation of a 25 basis-point cut, with a 6 percent chance of a 50 basis-point rate cut. This news help the market to hold on to earlier gains.

CPI came in line with expectations at +0.6% q/q and +3.5% y/y. However both the weighted median and trimmed mean measures were significantly below at +0.3% versus +0.6% expected. These underlyings’ are the numbers the RBA watch closely, so speculation of rate cuts has increased, with short-end AUD swaps around 10bp lower.

Last week we suggested that the bulls and the bears would again be wrestling for control of the markets, well the Bulls now rule. The Aussie market is trading above its 50 day moving average, which sits around 4150, and is now testing resistance around its 200 day moving average, which sits around 4,410.

Investors should be looking to utilise options strategies to protect their profits in this type of market. Investors have given their vote of approval on the eurozone bank rescue package and the proposals for the extension of the EFSF bailout package.

Remain attuned to the news from overseas particularly from China, Germany and the US regarding their economic growth and debt issues. Monitor the performance of the US dollar for a guide to the future direction of commodities and equities prices.

The S&P/ASX 200 is currently trading at 4410 having surged past the 4280 resistance level this week. Key levels for the index next week will be 4250 and 4450, with 4300 the key pivot level. Be prepared to use options to protect your profits and reduce your risk. Expect to see volatility ease going forward as the market participants look for some confirmation of the near-term market breakout.

Use options strategies to reduce your risk in these volatile times. The MDS Financial Advisory Services team can help with this and we have also discussed some of the strategies in our Analyst’s Eye Articles recently.

We regularly update you on trade recommendations so for Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research.

MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call me on 1300 610 024 for further information.

Setting the period to daily, and Type of chart to candlesticks you can easily achieve with a view layout, but resetting the Scale to log instead of arithmetic, changing the space displayed on the right hand side of the chart or displaying Calendar days can be accomplished in the Preferences window.

If you are on a slow connection or concerned about your internet bills you can minimise the amount of data that is loaded by the Bourse every time you connect. You can load less daily data, than the 9000 days that is the default. A year has approximately 250 trading days, so loading 1000 days will bring in four years of data. This may be enough for your style of trading. If you don’t use intraday data, then uncheck Load intraday data and uncheck Load 5 min data. This will reduce the amount of data the Bourse loads and boost the speed with which charts are displayed, while reducing the load on your internet downloads.

If you click on the adjustments button you can control which adjustments are visible in your charts. When a bonus issue, rights issue or a stock split occurs the effective number of shares is altered and this will affect the price of the share. For example a 1 for 1 bonus issue will mean every share holder now owns twice as many shares and the price of the shares will halve in value. If the adjustments are ticked the historical data will be adjusted so it appears as if the bonus issue never happened. This is useful for technical analysis as charts jumping all over the place make it very hard to calculate indicators. If you want to view the adjustments in the charts you can untick the box and the adjustment will become visible. It is normal not to adjust for dividends and the “dividend drop” can be seen on the chart, but you can adjust for this if you choose and smooth your chart even more.

You can customise your Retracement levels by altering the percentages in the Tool settings menu.

And you can alter the way View layouts behave in the View layouts menu as well as the default market extension in the symbols menu, which is preset to Australia for ASX market.

The only Preference that you should leave alone is the Bourse Servers which are preset to get data from the correct source.  Hands off!

You can make the most of the flexibility in customising the Bourse using the Preferences menu. You can adjust any of the Preferences, except the Bourse Servers to fine tune the Bourse and set it up just the way you like it.

If you’re involved in running a website or blog you might be interested in finding out how easy it is to display share prices on your site.

Our sister company Bourse Data has launched a new service for supplying market data feeds and investor relations services to websites, mobile applications and proprietary trading software.

Bourse Commercial has been supplying Australian and New Zealand stock market data and information for over 15 years, and has now teamed up with Thomson Reuters to offer an even wider range of data options.

Jazz up your website with a stock ticker, shareholder relations page or indices widget, or get a custom-built data feed to plug in to your trading software.

Find out more here!

Do you know how to profitably buy and sell shares in a market this volatile? Could you use some expert help?

Join the conversation at our next Traders’ Café, an informal online discussion led by successful trader and author Jeff Cartridge.

In these sessions participants can ask questions about market conditions, interesting charts, share performances, strategies and results, all from the convenience of the living room.

Register now and get your questions ready!

Volatility in the XJO. Chart source: Market Analyser

For info about other upcoming webinars visit the Trader Dealer website.

Australian shares have struggled this week as the reporting season gets underway with mixed results. The bad news from overseas regarding debt concerns simply does not let up. This week the sell-off came due to the impasse in Washington over the raising of the federal government’s $US14.3 trillion debt ceiling, leaving the U.S. vulnerable to a possible default or a credit downgrade from their triple-A credit rating. This could have disastrous impacts globally.

Investors moved to “risk-off” this week as the negotiations between Republicans, Democrats and the White House failed to reach a consensus as the deadline of August 2nd looms large. The markets have not factored in a U.S. default at this point and obviously expect some form of resolution by the deadline next week. The outcome next week will be critical for the performance of our markets near-term so expect a relief rally once the debt-ceiling is approved.

Commodity prices have continued to rise as the US dollar still struggles, with copper prices still around 10-week highs and the gold price at all-time highs.

U.S. Markets

U.S. stock markets have fallen this week and are on track for their worst weekly performance for over a year as the ongoing debt negotiations and threat of a credit downgrade have caused a sell-off.

The earnings season continues to beat estimates with 80 percent of the companies reporting beating earnings forecasts by an average of 15%, however investor focus remains on the debt ceiling issues.

The market is setting up for a relief rally once the debt ceiling issues are resolved, but there will be a problem if or when the credit rating is downgraded from AAA due to the ballooning debt. If the U.S. Government loses its AAA credit rating, this will have severe consequences, not the least of which will be increased borrowing costs, and will likely tarnish the view of the US dollar being seen as the world’s reserve currency.

Overnight the Dow Jones closed down -0.5% at 12,240, the S&P 500 index closed down -0.3% at 1,301, the Nasdaq ended flat at 2,766, and the smaller cap Russell 2000 was down -0.2%.

European Markets

European stock markets have held up quite well following an agreement by the European leaders for a fresh financing package for Greece and avoiding contagion concerns in other debt-laden members of the euro zone. Traders cheered the European leaders agreeing to a new rescue for Greece that also includes a plan for private creditors to voluntarily exchange existing Greek bonds for new bonds that will mature far in the future. However the ratings agencies Moody’s Investors Service and Standard and Poors have kept the pressure on financials by cutting Greece’s debt rating further into junk territory, indicating that the planned debt swap would constitute a default. Banks across the region have come under heavy selling pressure in the course of the week as Goldman Sachs lowered its outlook for the sector.

Overnight in London the FTSE 100 index was up 0.3% at 5,873, the German DAX was down -0.9% at 7,190, while in France the CAC was down -0.6% at 3,712.

Asian Markets

Asian stock markets have been generally weaker this week, as Chinese manufacturing data weighed on sentiment. The Chinese market plunged over 3% early in the week.

Asian markets have been under pressure due to increasing concerns over the U.S. debt ceiling impasse and the prospect of a credit downgrade or even a debt default. Across the region exporters suffered after a drop in U.S. durable-goods orders for June raised questions about future demand, while technology stocks followed their U.S. counterparts lower after some earnings misses.

Overnight in China, the SSE Composite was down -0.5% at 2,709, while in Hong Kong the Hang Seng Index was up 0.1% at 22,570 and in Japan the Nikkei 225 Index was down -1.5% at 9,901. The South Korean KOSPI was down -1.0% for the session, while the Indian market was down -1.2%.

Our View For Australia

The Australian share markets have been buffeted from the negative sentiment from overseas, particularly in the U.S. The S&P/ASX 200 index once again teetered on the key support level around 4450 and this will probably remain the case until the U.S. debt ceiling negotiations are resolved (next week). Our market needs to hold these levels, otherwise a test of the 4250 level could happen quickly.

Look for the market to test support around 4450, and if this can hold, expect another run at the key 4650 level. As stated last week the market needs to break above 4650 to confirm the double bottom which would be a setup for a move higher medium-term.

The U.S. impasse over the raising of their debt ceiling has proven to be the road block for global markets. The European leaders agreeing to the second bailout package for Greece was a positive but now we need a resolution to the U.S. debt crisis as the deadline of the 2nd of August looms large.

Our reporting season is underway, and a key take away will be how the miners are controlling their costs, given their unprecedented expansion of facilities in order to cope with the worldwide demand for resources. Banks are attractive on a yield basis and are again testing key support levels. Remember the dividend season is not far away and many blue chip stocks are cheap on a valuation basis, plus fund managers and investors alike are underweight equities.

The S&P/ASX 200 is currently trading at 4470 and is again testing pivotal support at 4450 near-term. Key levels for the index next week will be 4600 and 4350.

It is time to look for bargains in the market, especially if or when the U.S. debt ceiling issues are resolved.

By Michael Hevern
Head of Research

MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call 1300 610 024 for further information.

For regularly updated trade recommendations on ASX listed companies register for a free trial of MDS Financial Research.

The Covered Call, also known as a Covered Buy Write or Covered Call Write, is the options trading strategy that most beginners learn about. It is a strategy which seeks to make a monthly income by selling call options against existing stock holdings.

The Covered Call allows you to generate a regular monthly “rental” income on your current stock portfolio, even when the stock prices remain stagnant. The Covered Call can also be used to protect against a moderate short term drop in stock price, to a limited extent. These characteristics make the Covered Call an attractive options trading strategy for all traders who hold long term stock positions.

Use a Covered Call when you wish to hold on to a stock that is trading sideways to slightly higher, while making a monthly income from it. You can also use a Covered Call to protect your equity when the stock goes into a slight correction, but only to a specific price limit. A Covered Call consists simply of writing 1 contract of out of the money call options for every 100 shares of the underlying stock owned.

The Covered Call is ideal for generating a regular monthly “rental” income from your current stock position.

A recent trade that paid handsome dividends was Fosters, which we entered when there was takeover speculation, back in June.

We bought Fosters at $4.55 and wrote the $4.65 Jul11 Calls for $0.22 and closed the position on the 22^nd of June 2011 after the takeover bid was announced, for a tidy 7% profit.

Investors who took advantage of our High Yield Covered Call strategy actually made 30% on the same trade. This strategy will be discussed in a later article, or you can call me on 1300 610 024 to talk about it further.

Chart 1: Fosters Covered Call Trade (Took Profits on Takeover Announcement)

Covered Call Profile

You can plan and analyse your trade as shown above, using the Derivative Profiler option in the Market Analyser software.

Trade Note

We could have made a higher return on the trade if we just bought the stock (14% return), but by using the Covered Call strategy we reduced our risk as we were being paid $0.22 or 5% to wait for the bid to come along. At the time we entered the trade Fosters was saying that they had not been approached by any interested party.

The Trade

Options can be used in order to reduce your risk while participating in the profits from a significant move by the underlying stocks. Here we’ve explained the Covered Call strategy which is used to generate monthly “rental” income from your current stock position.

In future articles we will talk about the Covered Call Collar strategy, which is similar to the protective put options strategy in that you also buy put options as protection, and the Stock Repair strategy which is particularly relevant to this market.

Utilise the features in the Market Analyser software to trade plan your options trades for the particular options strategy using your specific trade selection criteria. You will save time and potentially reduce your trading risk.

By Michael Hevern
Head of Research

See Also:

Options Trading for All Types of Market Environments (Part 1): The Protective Put

For Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research.

MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call 1300 610 024 for further information.

Australian shares have traded lower this week after negative leads from key markets in the U.S. and Europe, despite surprisingly good GDP data out of China.

Our markets were hit from a number of sides with the details of the carbon tax revealed last Sunday, Moody’s Ratings Agency downgrading Ireland and putting the U.S. on a negative watch, and disappointing monthly jobs data out of the U.S.

Commodity prices have continued to rise as the U.S. dollar struggles, with copper prices still around 10-week highs and the gold price at all-time highs. This has helped support our miners this week.

Australian Market

Australian shares started the week poorly in reaction to negative leads from key markets in the U.S. after a disappointing jobs report, and from Europe, where fears of euro-zone debt contagion have weighed on markets. Investors also had to digest details of the proposed carbon tax, which would see 500 companies taxed from 1 July 2012 starting at $23/tonne of carbon produced and released into the atmosphere. This price will increase by 2.5% per annum and after three years the pricing will be set by an Emissions Trading Scheme.

The mining sector has held up quite well this week in response to solid commodity price gains, while the banks are back at their previous support levels and retailers have been hit hard after David Jones announced an earnings downgrade.

After this week’s heavy sell-off we are again testing key support levels and if these are broken we will likely resume trading in the falling channel which has been in place since mid-April. To put it in perspective this week’s losses have eaten up all of the gains of the previous three weeks.

U.S. Markets

U.S. stock markets have backed off their 2011 highs. Investor sentiment was dented from the start of the week after the disappointing U.S. non-farm jobs data (the U.S. unemployment rate remains stubbornly high at 9.2%) and the ongoing brinkmanship in the debate being held in Washington regarding the $US14.3 trillion debt ceiling and the growing fiscal deficit, scheduled for a vote on August 2.

Overnight, the U.S. government agreed on $US1.5 trillion in spending cuts and will resume negotiations over raising the debt ceiling. The Federal Reserve Chairman Ben Bernanke has moved markets again this week, but has now clarified his comments about a possible third round of quantitative easing (QE3), saying that the Fed is unlikely to act on any easing in the near-term.

The warning of a possible debt-downgrade for the United States had fuelled fears of higher borrowing costs and cast a shadow over the markets. Investors have chosen caution after Moody’s Rating Agency announced a review of the U.S. AAA credit ratings for a possible downgrade, which has seen financial stocks and some exporters sell-down.

There is some M&A activity in the U.S. with ArcelorMittal and Peabody Energy launching a $US5.0 billion takeover bid for Australian’s coal miner Macarthur Coal, at $15.50/share which is only slightly higher than the previous bid of $15.00/share. Also, BHP Billiton has entered into a definitive agreement to acquire Petrohawk Energy Corporation for a total equity value of approximately $US12.1 billion and a total enterprise value of approximately $US15.1 billion, including the assumption of net debt. The earnings season has begun on a positive note with JP Morgan and Google.

Overnight, the Dow Jones closed down -0.4% at 12,437, the S&P 500 index closed down -0.7% at 1,309, the Nasdaq ended down -1.2% at 2,763, and the smaller cap Russell 2000 was up 0.9%.

European Markets

European equity markets have fallen this week, backing of their 2011 highs due to continuing worries over sovereign debt contagion. A downgrade of the Irish sovereign debt rating to junk status by ratings firm Moody’s Investors Service has cast a cloud across Europe with Ireland now joining Greece and Portugal as debt crisis basket cases. European bank stocks continued to weigh throughout the week, especially those with exposure to the sovereign debt of Italy and peripheral European PIIGS nations. The Italian economy is in a debt mire and overnight the government’s borrowing costs surged in a bond auction, rekindling worries about the spread of the euro-zone debt crisis. The Italian government successfully sold nearly EUR5 billion of long-term bonds, but its borrowing costs rose sharply, while the Senate approved a EUR40 billion austerity package, which will now go to the lower house of parliament for a vote.

The next key data out of Europe will come from the European Banking Authority which will release the results of the stress tests for 91 banks as part of an effort to reassure investors that the region’s banks have sufficient capital. The publication will be released this weekend and will include information on capital levels, estimates for profitability in 2011 and 2012 as well as the size and maturity of their holdings of sovereign debt, the EBA said this month. Analysts are concerned however that there was an unwillingness to test for a Greek default in the scenarios.

Overnight in London the FTSE 100 index was down -0.9% at 5,852, the German DAX was down -0.7% at 7,215, while in France the CAC was down -1.1% at 3,741.

Asian Markets

Asian stock markets continued to fall this week as investors focused on the debt issues in Europe and the U.S. The Chinese market bucked the trend after the announcement of robust GDP data boosted investor sentiment. Data showed the second-quarter gross domestic product rose 9.5% year on year, and industrial production in June was up 15.1%, beating forecasts and easing fears that the Chinese economy may be heading for a hard landing. This is another reason Aussie miners have supported our market.

The Japanese market is again trading below the 10,000 level and the Hong Kong market has been sold off heavily this week and is again testing recent key support.

Overnight in China the SSE Composite was up 0.5% at 2,810, while in Hong Kong the Hang Seng Index was up 0.1% at 21,940 and in Japan the Nikkei 225 Index was down -0.3% at 9,936. The South Korean KOSPI was flat for the session, while the Indian market was up 0.1%.

Our View

The Australian share market has suffered from the negative sentiment from overseas. The S&P/ASX 200 index rejected the key resistance level around 4650 and has remained below its 50 day moving average, which are negative signs going forward.

Look for the market to continue seeking support around the 4450 level which it has held for the past month. If this level is broken, then we will likely resume trading in the falling channel which has been in place since mid-April and 4250 will be the next target.

The U.S. earnings season continues next week but the debt crises in the U.S. and Europe are dominating sentiment near-term. If the fears over debt subside, then earnings could be the catalyst for a move higher, as many of the analyst earnings forecasts have been ratcheted down because of the soft June economic data showing slowing economic growth.

Our miners continue to support our market due to the robust commodities prices which have occured because of the weakening US dollar. The carbon tax and mining tax remain as headwinds. Banks are attractive on a yield basis but they have broken monthly key support levels and many blue chip stocks are cheap on a valuation basis, plus fund managers and investors alike are underweight equities.

The S&P/ASX 200 is currently trading at 4480 and has broken above short-term resistance. Key levels for the index next week will be 4550 and 4400.

By Michael Hevern
Head of Research

The same situation exists for ASX listed companies. While most companies have completed their financial year, the figures still need to be collated and sent off to the auditor for review. Once this is completed the company will release their annual report which tells their shareholders how the company has performed during the last financial year. This is where The Bourse Research tool becomes very useful.

To access the company information, open The Bourse software, click on the Bourse Links menu, and select Bourse Research. From here you can type in the code of the company you are interested in viewing. From the drop down menu you can choose the type of company information you want to view. A summary of the company’s business operations is available, along with the company’s balance sheet, profit and loss, cashflow, ratios and even the analyst’s forecasts.

The interim reports are the half yearly reports released after the financial results to December have been calculated, so at this time of year it is the annual reports we are interested in. Most companies have a June 30 balance date, though there are a few unusual ones out there.

Here we are looking at Forge Group (FGE) and data for this company is not yet available for the 2011 financial year. Once the company releases its annual report the data will be updated automatically. When we take a look at a particular company we can see all of the historical data for that company. Because The Bourse displays data over multiple years it becomes easy to see trends in the fundamental data over time. FGE has showed a steady increase in profit over the last four years, from just $2.67 million to $29.45 million. This has largely been due to strong revenue growth during the same period. We will soon know if FGE has been able to sustain this strong growth in 2011.

In addition to the profit and loss we can view the balance sheet and cash flow statements as well as the ratio analysis. The ratio analysis includes a wide range of ratios calculated from the data in the annual reports. Information such as PE ratio, gearing, profit margins, return on equity and many more are available.

Once again trends in the data can clearly be seen, such as an increase in profit margin from just 3% up to 12%. We will know soon whether this trend has continued.

With company reporting season in Australia due to start soon keep a close eye on The Bourse Research tool where you can follow the fundamentals and trends in your favourite companies.

By Jeff Cartridge
Education Manager

Sign up for a 14 Day Free Trial of The Bourse Share Market software.

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This book is available from the Educated Investor Book shop. If you would like to order this book please visit The Educated Investor Bookshop website.

By Janene Murdoch
Educated Investor Bookshop