Buy GPT – Price is now finding support
We recommend buying GPT and selling a covered call option into September.
GPT will pay a $0.123 dividend on the 29th of June.
GPT
NAB – Algo Sell Signal Update
NAB was removed from our ASX 50 model portfolio following the Algo Engine sell signal on 27th February at $30.64.
The chart below perfectly illustrates the negative price action following the recent sell signal.
U.S. Retail Sales Weighing On Rates
U.S. Retail Sales fell for a third straight month in February as households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter.
Consumer spending, which accounts for more than two-thirds of U.S. GDP, appears to have slowed at the start of the year.
The combination of weak consumer spending data and global manufacturing data has been enough to see yields run into resistance.
The peak optimism on synchronized global growth and inflation pick-up, now appears to have passed.
With yields moving lower, we’re likely to see a better environment for the yield sensitive sectors. Telecommunications, Utilities, Consumer Staples and Real-Estate.
Some of the local names in these sectors include: SYD, TCL, AGL, GPT, SCG and WFD.
The chart below illustrates the yield on the 30-yr bonds falling relative to the shorter dated 2-yr bonds. This is typical during a period of slower economic growth.
Medibank Is Approaching The Buy Zone
Medibank is trading near the $3.00 support level.
We see little in the way of earning growth over the next 12 months, however, with stock now on a 4.2% dividend yield, we expect to see renewed buying interest.
We recommend overlaying a covered call strategy to generate 10 – 12% cash flow on an annualised basis.
Buy near the support zone and look for a rally back to $3.15 before setting the call strategy.
Medibank Private
XJO – Under Price Resistance
The XJO is trading into a weak price structure following a series of lower high formations.
XJO
Short Signals in – FXJ & TPG
We’re watching FXJ and TPG as potential short trades: Selling at a higher price and buying back at a lower price.
FXJ – Short with stop loss back above $0.79
TPG – short with stop loss back above $6.37
BUY – Link Holdings
We recommend buying Link Holdings and placing a stop- loss below the recent $8.25 support level.
Link goes ex-div $0.07 on the 27th of March.
March Quarterly Index Review
It’s always interesting to look at the index re-balancing and think about the names that have been removed or added in the index rankings.
QBE has a negative price structure and an Algo Engine sell signal.
S32 has an Algo Engine buy signal and is a core holding in our ASX Top 50 model Portfolio. As of March 19th, S32 will now move into the ASX Top 20 model.
We suggest readers look at the charts of the two new additions to the ASX100 index, CWY and XRO.
Buy – Origin Energy
We recommend buying ORG Energy when the short-term indicators turn positive. We expect the entry level will be confirmed early next week.
Keep this one on your watch list.
Origin
Buy GPT Group
We recommend buying GPT Group and placing a stop loss below the recent $4.65 low.
Investors may prefer to hold the stock and sell September $5.00 call options to enhance the cash flow, whilst staying exposed to the June dividend.
GPT will pay $0.123 dividend on June 29th.
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2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
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