Our Algo Engine generated a buy signal in Wesfarmers into the ASX close on Friday at $44.40.
This “higher low” pattern is referenced to the intraday low of $43.70 posted on May 10th.
We see value for investors emerging in the $44.50 range.
Following the spin-off of Coles, look to sell covered call options to enhance the income return.
Wesfarmers
CYB reports their earnings on Tuesday and we recommend buying the stock ahead of the announcement.
We believe the combined CYB and Virgin Money business provides a strong platform for growth.
CYB
The IZZ iShares ETF provides broad exposure to China Large-Cap stocks.
Recent price action has found medium-term support at $55 and stop losses should be consider on a break back below this level.
IZZ China ETF
We suggest buying AZJ and selling a June 2018, $4.40 strike call option for an additional $0.15 credit.
AZJ goes ex div $0.14 on the 26th Feb 2019.
ASX is one alternative for investors looking for a replacement for bank stocks within their portfolios. ASX offers 3.5% yield, (fully franked) and when combined with a covered call option, the cash flow is boosted to 10% p/a.
Our Algo Engine flagged a recent buy signal on the high low formation at $58.
ASX is also a current holding in the ASX100 model portfolio, up 38% since being added back in September 2016.
Crown Resorts is a current holding within our ASX100 model portfolio.
Following the recent sell-off on the back of global concerns about slower VIP growth, the stock has retraced from $14.50 to $11.75, which forms a “double bottom” pattern dating back to October 2017.
At $11.75 we believe Crown offers value and investors should look to accumulate the stock for a move higher.
Our Algo Engine shows Medibank remains under “buy conditions”.
With yesterday’s update at their AGM showing that the improved momentum in 2H18 had continued into 1Q19, we recommend accumulating the stock.
Buy Medibank and sell out of the money call options to enhance the income.
Medibank
The horizontal channel on the WPL chart below indicates our target price range where we believe new buying interest will begin to build.
The mid-point is approximately $32.00
STO & OSH should also be considered.
Woodside Petroleum
The XJO has formed a “lower high” pattern within the existing Algo Engine buy signal structure.
The market has rallied 6% from the recent buy signal but we’re now mindful of the recent break of the “higher low” structure, as circled on the chart below.
5941 is resistance for the XJO and whilst the market remains below this level, some caution is required.
Names that remain supported within today’s broad market sell off include, AGL, CTX, GPT, WES, SCG, TCL, HSO & WOW. We remain cautious on the banks and select resource names .
XJO
Last month Healthscope’s shares jumped as much as 22% to $2.17 on the news BGH Capital-AustralianSuper consortium will offer $2.36 cash per share as an indicative takeover price.
Since then, HSO shares have settled back at $2.05 – $2.10 and we feel value is now on offer and investors should look to accumulate the stock.
Healthscope runs 43 private hospitals across Australia and 24 pathology laboratories in New Zealand.
In May, Healthscope refused to open its books to a prior takeover offer, instead, saying they’ll look into the sale and lease back of its hospital assets.
Pressure is now mounting on the HSO board of Directors to engage and allow the acquiring entity access to the data rooms and due-diligence process.
NOTE: This morning a competing bid has been announced, Brookfield Capital has now Offered $245.5 per share.
Healthscope
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453