Defensive Stocks For An Uncertain Market

Posted on | by Todd | Leave a Comment on Defensive Stocks For An Uncertain Market

Recent price action in the local ASX market suggests we’ve entered a period of heightened volatility and potential for downside risk. Since posting the high for-the-year at 5945.00, the index for Australian shares has dropped almost 4%.

Looking across the spectrum of ASX top 100 stocks, we have found several names which can offer defensive value in a broadly sideways to lower share market.

These include: IPL, MPL, WOW, CTX, QBE, SHL, SYD, TCL, AMC, and IAG.

We consider these stocks to have the potential for moderate capital growth and, combined with a buy/write strategy, will offer 10 to 12% cash flow on an annualized basis.

ASX: XJO Index

 

 

OVERNIGHT News: FOMC and Crude Oil

Posted on | by Todd | Leave a Comment on OVERNIGHT News: FOMC and Crude Oil

The FOMC announcement to raise the target Fed Funds rate by 25 basis points to 1.25% was largely priced into the market.

However, the “hawkish” guidance  about further upward adjustments and the specific plans to reduce the FED’s $4.5 trillion balance sheet have raised concerns about current stock market valuations and the impact of tighter monetary conditions.

The major US indexes were mixed with the NASDAQ down .50%, THE Dow Jones 30 up .25% and the SP 500 down .10%.

US Energy stocks were all lower as Crude Oil prices slumped on a downbeat assessment from the IEA and increased production from both the US and OPEC nations.

The front month WTI Crude contract closed down over 3% to $44.65, which is the lowest closing price in over 18 months.

As a result, shares in both BHP and Oil Search have opened more than 2.5% lower.

Chart – Dow Jones

 

ETF Watch- NASDAQ Sell-Off

Posted on | by Todd | Leave a Comment on ETF Watch- NASDAQ Sell-Off

The NASDAQ stocks rebounded last night with Facebook, Google and Amazon all trading over 1% higher after the two day sell-off over the weekend.

According to several “high frequency” analytical reports, it’s too early to step back into the FANG stocks. Of the four times that a similar high volume sell-off has occurred since 1999, tech shares have needed several weeks to find a bottom.

In addition, as shown in the chart below, the last few days have seen the largest capital outflow since 2007 from the QQQ: the NASDAQ based ETF.

Our ALGO engine created a buy signal on the ASX BetaShare NASDAQ ETF on February 8th, 2016.

That ETF, with the symbol: NDQ has gained over 32% since then. Should the recent sell-off in the NASDAQ turn into a deeper correction, we will watch for the next ALGO buy signal.

QQQ ETF

 

BetaShare ETF: NDQ