Gold Is Weak, Just Before Golden Week

Posted on | by Todd | Leave a Comment on 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

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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

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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.

CSR

 

ALGO Signal: Sell Oil Search

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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

 

ETF Update: Aussie Dollar Slips On US Rate-Hike Prospects

Posted on | by Todd | Leave a Comment on ETF Update: Aussie Dollar Slips On US Rate-Hike Prospects

The Aussie Dollar fell to a 1-month low against the USD at .7850 as comments from FED chief Janet Yellen increased the odds of a December rate hike to over 70%.

As the interest rate premium between the US and Australia continues to narrow, the AUD/USD will likely trade with increased downward pressure.

At this stage, the spread between the US and Australian 10-year yields has dropped to 50 basis points, the most narrow in over 5 years.

Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate  by 2.5% for every 1% change in the AUD/USD exchange rate.

With a current price of $12.90, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January low of .7160.

BetaShare ETF: YANK

 

 

 

 

 

Trade Update: Buy/Write Strategy For AMCOR

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On September 7th, AMC announced that they were in early takeover negotiations with US packaging firm Bemis Company.

The estimated value of the acquisition is in the AUD $5 billion range, which is not a quite 1/3 of AMC’s market capitialization of AUD $18 billion.

Shares of AMC have traded about 3% lower since the announcement and reached a 2-month low of $15.20 last Friday.

We believe the internal momentum indicators are approaching an oversold condition, and consider current prices a reasonable level for a buy/write strategy.

Amcor

 

 

 

 

Look To Buy TWE Below Current Levels

Posted on | by Todd | Leave a Comment on Look To Buy TWE Below Current Levels

Shares of TWE have dropped about 6% since posting an all-time high of $14.64 on September 11th.

There’s no question that TWE is one of the most solid performers on the ASX  and we have bought and sold it successfully for client accounts several times this year.

With the company making an accelerated push into the US premium wine market, we feel this pullback will offer another good buying opportunity in the near-term.

In addition, TWE is only $100 million into their $300 million stock buyback scheme, which should also offer price support at lower levels.

We see scope for a move back to $13.10 and will update when an ALGO buy signal is triggered.

Treasury Wine Estates

 

ALGO Update: BTT Has Hit Resistance at $11.35

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Our ALGO engine triggered a buy signal in BTT on September 8th at $10.15.

The share price reached a high of $11.35 last Friday but is now looking technically stretched.

We suggest exiting long positions at current levels or raising stop-loss orders to $10.88.

A more significant support level can be found at $10.10, which may attract fresh buying interest.

BT Investments

 

 

TRADE UPDATE: Exit Longs In SUNCORP

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On September 18th, The ALGO engine signalled a “higher low” structure in shares of Suncorp at $12.60.

Two days later the company paid a 40 cent special dividend and pledged to boost dividends throughout 2018, which lifted the share price.

Despite posting a high of $13.10 on Monday, the upside technical momentum looks to be running out of steam.

As such, we would suggest taking profits at current levels or raising stops to break-even. The chart below illustrates that the next key support level is near the $12.40 area.

Suncorp

 

WPL And ORG Are Looking Good, Technically

Posted on | by Todd | Leave a Comment on WPL And ORG Are Looking Good, Technically

Over the last several months, there have been many questions asked about the likely direction of energy-related stocks.

The fundamentals in the Crude Oil market are difficult to forecast and the political climate, domestically, may impact the future revenue of electricity markets.

However, from a technical perspective, both ORG and WPL look like they may be setting up for a move higher.

We currently see reasonable upside targets at $30.75 in WPL and $8.00 in ORG.

Woodside Petroleum

Origin Energy