Big Week Ahead For The Aussie Dollar

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The AUD/USD ended the week with a softer tone at .7450, as S&P lowered the credit scores of 23 Australian financial institutions and Moody’s downgraded China’s sovereign credit rating.

This week’s retail sales and manufacturing data will have an impact on the next move in the Aussie.

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

The current price of YANK is $15.08. When the AUD/USD fell to .7330 on May 9th, the price was $15.55.

We estimate that when the AUD/USD trades down to the January low of .7160, the unit price for YANK will be approximately $16.50.

BetaShare YANK ETF

 

 

 

ETF Update: MVB Covers All The Aussie Banks

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Since the beginning of May, shares of the “Big 5” banking stocks have dropped between 8 to 10%.

We expect to see a bounce of some degree in the near-term, but it’s difficult to predict which name will see the most significant rebound.

For investors looking to take a step back into the long side of the banking sector, we suggest the Vaneck banking EFT with the symbol: MVB

This Exchange traded fund has dropped from $30.00 on April 27th the current price of $27.30. We believe a small allocation at these levels, for a bounce back to $28.75 would represent a solid “tactical” trade.

MVB Aussie Bank ETF

Ansell: Looking Good For A Buy/Write Strategy

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Shares of Ansell (ANN) reached a 5-month high of $25.30 yesterday as a Chinese consortium agreed to buy part of their non-core asset group for $800 million.

In announcement after the agreement, ANN officials outlined a plan to buyback up to 10% of the company’s common stock over the next 12 months.

We believe this development will underpin the share price to the downside. However, $26.00 could could be a difficult level to clear, even with the buyback.

With today’s sharp sell off into the $23.00 handle, ANN shares are a good candidate for a buy/write strategy. Selling the $26.50 calls into December will enhance the returns, and keep investors exposed to the August dividend of approximately 32 cents.

Ansell

 

Limited Upside In QBE

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QBE Insurance posted an $844 million net profit on May 3rd, which was their best result since 2010.

By May 11th, the share price had raced to a new high for the year at $13.60.

With internal momentum indicators beginning to turn lower, we are suggesting to exit long positions or sell the $13.50 covered calls into September.

We expect to see good support in the $12.00 area as a medium term target.

QBE

 

JHX Points Lower On Weaker US Housing Data

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Since trading as high as $23.20 on May 2nd, shares of JHX have dropped over 14% and are now trading below $19.80.

We posted a report on the blog on May 19th pointing out that JHX reported FY17 results which were below market expectations.

Overnight, US New Home Sales fell to 569,000, well short of the consensus expectation of 610,000. As new home construction continues to slide, we sell further downside range extension for JHX.

The new key support level comes in near the February low of $18.20.

James Hardie

 

Lockheed Hits All-Time Highs On Saudi Deal

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Shares of Lockheed Martin (LMT) reached an all-time high of $280.00 as the defence contractor agreed to a deal with Saudi Arabia worth $28 billion.

This deal alone is enough to cover the company’s revenue for over 6 months

LMT is one of the key beneficiaries of a total arms package which will be worth over $350 billion over the next 10 years.

Among other products, the deal includes the sale of 150 Black Hawk helicopters, systems for air defence, tactical aircraft and combat ships.

Lockheed Martin

Gold Firms, But NCM Still Lags

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On May 6th, we posted a report on the blog which suggested that both Spot Gold and shares of NCM were in oversold territory.

At that time, the prices were at $1225.00 and $20.10, respectively. Now, Gold is back over $1250 and looking firm on the internal momentum indicators. We expect the yellow metal to test April 17th high on $1290.00 in the medium-term.

In this sense, shares of NCM have lagged behind the spot gold price and have gained just over $1.00 during the same period.

We still consider NCM undervalued at current prices and suggest buying outright shares, or call options out to July, for a medium-term price target of $25.50.

Newcrest Mi

 

ALGO Engine Buy Signal For NAB

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The ALGO engine triggered a buy signal for NAB at $30.40 on Friday.

NAB shares have dropped over 11% since posting an intra-day high of $34.00 on May 1st. Several internal momentum indicators are showing an overbought condition.

With US equity markets stabilizing after Wednesday’s sharp sell off, it’s likely that all the local banking names will get a lift when the ASX re-opens on Monday.

We see scope for a corrective bounce into the $32.50 area, and suggest looking to buy NAB shares outright, or consider buying the $32.00 call options into June.

Aussie Dollar Pops Higher After Jobs Data

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The AUD/USD traded higher after yesterday’s domestic employment numbers beat expectations.

With headline jobs growth reported at 37.4k (versus 4.5K consensus) the AUD/USD pushed against the resistance level at .7450.

We don’t expect these data to move the RBA from their easing bias and, if benchmark overnight rates are going to move, the likely direction will be lower, not higher.

Investors who want to profit from a falling AUD/USD can buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse EFT, which means that the unit price trades higher as the AUD/USD moves lower. YANK is also weighted, so that a 1% fall in the currency translates to a 2.5% gain in the unit price.

When the AUD/USD traded down to .7330 last week, the unit price of YANK was $15.54. We estimate that if the AUD/USD trades back to the January low of .7150, the price of YANK will be $16.50, or an approximate 10% gain from current levels.

YANK ETF

 

 

 

 

 

 

Orica Slips On Lower Earnings

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Orica Limited has reported that their 1H17 net profits after tax was $195 million, which beat the expectations of $185 million.

However, ORI shares are down close to 2% at $18.26 as revenues fell and guidance on key Ammonium-Nitrate prices are pointing lower.

An oversupply of Ammonium-Nitrate will likely act as a drag against future earnings and cap the share price below $19.25.