Leon Hinde

US markets were off 3 per cent overnight, led lower by bank and industrial shares, as the US bond market sent worrisome signs about economic growth.

The yield on 10yr treasuries has now fallen from 3.27% back to 2.91% in the past two months. This move should help to support yield sensitive names.

Along this theme, we continue to like AMC, SHL & GPT as buy- write opportunities.  A combination of the dividend plus the call option income is generating over 10% cash flow on an annualized basis.

Woolworths is a current holding within the ASX 100 model portfolio. We see value emerging at $28 and suggest investors look to accumulate the stock with a view towards selling covered call options to enhance the income return.

The chart below shows a series of lower high formations that continue to form in CBA. As recently as last Friday, we had another Algo Engine sell signal at $73.05.

Other bank names under Algo Engine sell conditions are NAB, WBC, BOQ and BEN. We recommend remaining on the short-side of this group.

Medibank is a current holding within the ASX 100 model portfolio and is under recent Algo Engine buy conditions. With the share price now trading at $2.45, we see this as a level to accumulate the stock.

On a move back above $2.55 we suggest adding a covered call option to enhance the income return.

Energy and Material stocks are set to benefit from US President Donald Trump and Chinese President Xi Jinping agreeing to temporarily halt the imposition of new tariffs, as they work towards negotiating a more permanent agreement.

BHP, WPL, S32, STO and OSH are our preferred holdings.

IZZ, (iShares China Large Cap ETF) is a current holding in our ETF model portfolio and following the positive outcome to the US China trade talks at the G20, we expect to see IZZ continue to trade higher.

Support is at $55 and we see room for a material push higher.

Our Algo Engine generated a recent buy signal in TWE and following the 30%  fall in the share price, (since August results), we now recommend accumulating the stock. 

The sell-off was largely based on  concerns of a weaker China
market.

TWE trades 19x FY20 earnings and 2.2% dividend yield. The market continues to expect 15 – 20% EPS growth over the coming years.

BHP, S32 and OSH are recent Algo Engine buy signals where price action is now finding support and trending higher.

It’s also worth drawing your attention to recent signals in Whitehaven Coal (WHC) and Alumina (AWC).

We identified the price gap at $5.25 in Santos and have been patiently waiting for the retracement. The share price made  a low of $5.45 and has now found buying support.

We now look to accumulate STO, OSH and WPL and we’ll also sell covered call options to enhance the return.

We recommend buying Healthscope following the share price retracing from the recent high and filling the technical price gap down to $2.10.