In this section we provide readers with three stocks that have attracted the interest of the broking community or the ‘herd’. Broker recommendations tend to be biased and highly optimistic. We try and breakdown these barriers and give our own honest opinion. It is important to keep in mind that technical analysis is only one part of the investment process and any recommendations do not give consideration to the underlying fundamentals of each business. Macquarie Group (MQG) – $103.08 – Has upgraded its profit forecasts. The investment bank says profit will be up 10% for the year to March 31. The profit upgrade comes on the back of stronger performance fees and continued growth in financial services. CEO Nicholas Moore said “Macquarie remains well positioned to deliver superior performance in the medium-term due to our deep expertise in major markets, strength in diversity and ability to adapt the portfolio mix to changing market conditions, the ongoing benefits of continued cost initiatives, a strong and conservative balance sheet and a proven risk management framework and culture.” said chief executive Nicholas Moore. Broker View:  Citi (SELL $79.50) – The broker has bearish view on Macquarie. Despite issuing a profit upgrade, the broker says capital markets have underperformed due to low volatility and it doesn’t believe the impact of rising interest rates if factored into market valuations. It recommends selling Macquarie. Unconventional View: We disagree with Citi. Sure the interest rate rise expectations aren’t factored into markets, which is what is the primary cause of volatility these last few days. But we think this all short term stuff exacerbated by computer trading. Once the dust settles, interest rate rises are a positive. The underlying fundamentals are positive. US economic growth is intact, unemployment is low and interest rates are rising. This is merely a shake-out caused by rising inflation and interest rates. Nothing more sinister. For that reason when the market does bounce back, MQG will be the stock to hold. The investment bank has just told the market that they expect profits to be higher than expected. We all know MQG has a reputation for providing conservative guidance to investors. So the fact that it upgraded profit is a big deal. MQG are due to post their results on 4 March. Credit Suisse have even upgraded its forecasts by 5% for the year and raised their target price to $110. MQG says it has changed its business since the GFC toward more reliable asset-management, financing and commercial-banking operations. This will help cushion volatility in investment banking and trading. For that reason also, we think MQG will be able to ride this volatility out. Bell Potter has told its clients that now is “a great opportunity to invest in this cash and growth story”. It also has a Buy and target price of $109.50. The figure we’re looking for when it reports is NPAT of $2.4bn. The stock is down 5% week to date. We think investors should be buying on any weakness in the lead up to its result. On the chart, the stock is still in a solid uptrend but this market rout could see the stock pullback towards to $91. That’s where its support line is. We think investors should be buying on any weakness. Wesfarmers…

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