US Labor Day Preview

Posted on | by Todd | Leave a Comment on US Labor Day Preview

During yesterday’s Asian session and into the London time frame, investors were anxious about North Korea’s provocative missile launch, the flooding disaster in Texas, and the looming US debt ceiling debate.

However, once the US session opened, investor’s attenton  turned to preparing for the Labor Day long weekend, which marks the end of the Northern Summer.

The NYSE will close early on Friday and will remain closed all day next Monday.

Volume on the Dow Jones 30 was barely 220 million, down 25% from the 3 month rolling average of 310 million per day.

As the chart below illustrates, the SP 500 remains below the 30-day moving average with a downward bias.

S&P 500 Index

 

Gold Jumps On North Korean Missile Launch

Posted on | by Todd | Leave a Comment on Gold Jumps On North Korean Missile Launch

Earlier this morning, North Korea launched a ballistic missile that flew over the Northern part of Japan and landed in the Pacific near Hokkaido.

The missile was fired from the Sunan region around 7:30 am, Sydney time, and flew approximately 2,700 km at an altitude of about 550 km.

Both South Korea and Japan responded with a strong statement denouncing Pyongyang’s sharp escalation of tensions in the region.

Gold was already $12.00 higher after the US session and added another $8.00 after the news broke this morning. As illustrated on the chart below, spot Gold broke above  a 7-year downtrend line and reached a high of $1324.50.

In an environment of global economic uncertainty and heighten geo-political tensions, we still prefer the long side of Gold and see the next resistance level at $1340.00

We still see scope for more upside in the local Gold names. Both Newcrest and Evolution are trading over 2.5% higher in early trade. We consider an upside target of $23.60 in NCM and $2.95 in EVN as reasonable price targets.

Spot Gold

Newcrest Mining

Evolution Mining

 

More Troubles For The CBA

Posted on | by Todd | Leave a Comment on More Troubles For The CBA

Shares of CBA have posted a new low for the year at $76.55  as APRA announced that they will be setting up an inquiry after a series of problems prompted concerns about the bank’s culture, leadership and accountability.

This is  not a good addition to CBA’s current AML allegations from AUSTRAC and a class action suit filed on the behalf of shareholders.

On balance, we don’t see any obvious catalyst to drive any of the domestic banking names higher and CBA now has the weakest technical structure.

The next key price support for CBA will be found near the October 2016 area near $75.00.

  Commonwealth Bank