ALGO Sell Signal: Macquarie Group

During a thin, pre-holiday trading session on Friday, all the major banking names bounced off their intra-day lows.

Into the close of ASX trade, our ALGO engine triggered a sell signal in MQG at $90.90.

MQG peaked on May 8th at $96.30; the day before the government announced the banking levy. Subsequently, the shares dipped to $82.30 on September 8th.

With all the local banking names facing headwinds in core revenue growth going forward, we consider the rebound in MQG shares as corrective in nature.

As the chart below illustrates, a trade back to the June 20th high of $91.45 would signal a “double top” and likely be met with selling interest.

With internal momentum indicators showing an “overbought” condition, we see scope for MQG shares to retest the $83.00 level over the medium-term.

Macquarie Group

Domino’s Pizza Isn’t Delivering

Our ALGO engine originally triggered a sell signal for Domino’s Pizza on July 25th at $58.00. Another sell signals was triggered on the close yesterday at $45.80.

As the chart below illustrates, the dominant chart pattern in the stock is the 13% gap lower between August 14th and 15th.

This gap lower coincided with Domino’s rollout of their new “Quality Fresh” promotion. Early numbers from the company haven’t shown that the “premium” pizza promotion has been a success.

Yesterday’s sell signal is just inside the gap area and fits into the “lower high” chart formation.

A reasonable downside target on DMP over the medium term is $38.00.

Domino’s Pizza



Gold Is Weak, Just Before Golden Week

After trading as high as $1358.00 on September 8th, the spot gold price has dropped close to 6% posting a low of $1277.00 during last night’s London session.

Several global-macro reports suggest that higher US interest rates combined with a stronger US Dollar were primary drivers of the yellow metal’s move lower.

However, daily charts show that in the lead up to Chinese Golden Week, the price of spot gold has dropped between 5% and 8% every year for the past four years.

In each of those years, the Spot price rebounded to make new highs over the course of October.

On September 20th, we posted that Newcrest Mining was a reasonable buy in the $21.80 range.

Looking forward, we expect the $21.00 area to offer good support for a move back into the $24.00 area into the end of the year.

Newcrest Mining


ALGO Update: Crown Is Back In The Buy-Zone

Shares of Crown LTD have drifted back into the lower part of the $11.00 handle, which we consider a buy zone.

Our ALGO engine triggered a buy signal on August 8th at $11.43, and again at $11.15 yesterday.

We acknowledge that the recent gaming numbers from the WA casino were down, and that the general tone in the ASX 200 is soft.

However, we still see reasonable growth potential in CWN going forward and have a medium-term target of $12.80.

Crown LTD


ALGO Signal: Sell CSR

At the close of trade yesterday, our ALGO engine triggered a sell signal on CSR at $4.58.

This is the second sell signal in just over a month as shares of the building supply company are still trading within a “lower high” formation dating back the all-time high price reached at $5.25 on May 9th.

Fundamentally, much of the recent price rise could be attributed to the two hurricanes which passed through the USA, but that looks to have run its course.

Further,  earnings growth per share for CSR  is expected to fall up to 14% over the next three years.

With the recent EPS at 35 cents, this expected contraction could drag EPS down to 30 cents.

As such, our downside target over the medium-term is $3.70.



ALGO Signal: Sell Oil Search

Our ALGO engine triggered a sell signal on Oil Search at yesterday’s ASX close at $7.11.

Over the past 2 months, the share price of OSH has been strongly correlated to, and benefited from, the rise in Spot Crude Oil.

With the internal momentum indicators in both markets approaching overbought territory, we expect to see a pullback in OSH.

As the chart below illustrates, there is stiff resistance near the May highs of $7.35 and the next key support level can be found just below $6.40.

Oil Search