We’re watching the rebound in US financials as a leading indicator for momentum in the Australian banking shares.
The chart below of Goldman Sachs shows the minor bounce that’s recently taken place. However, it looks like selling pressure is now building and the short term momentum indicators have turned lower.
Unless, Goldman Sachs can trade back up through the $230 resistance, it looks like the rebound higher, could now be completed.
On account of heightened claims activity in QBE’s Emerging Markets (EM) division, QBE has downgraded its FY17 guidance.
However, we remain optimistic regarding the QBE turn-around and feel the cycle is bottoming for QBE and the outlook is encouraging.
With the stock trading 10x forward earnings and 6% yield, along with a 3-year A$1bn buy back, which was announced in February, QBE is worth adding to your watchlist.
QBE is likely to commence their share buy-back program by late August 2017 and buying ahead of this time should be rewarded with higher prices into 2018.
Our Algo Engine triggered buy signals in both WOW and SOL; both opportunities are worth further consideration. Buying support is likely to increase at or near the current entry levels.
Reminder: We now have a new tutorial video in the help menu which explains the navigation of the watch-list feature, this includes reviewing the recent algo signals and customising your own watch-list.
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Our Algo Engine generated a “short” or sell signal in General Electric back in mid December, when the stock was trading $32. In last nights sell-off in the US, GE was the worst performing stock within the Dow Jones index.
The overnight selling is a continuation of the downtrend that has been in place since the December high.
The Australian Competition Tribunal has approved the proposed merger of TAH and Tatts Group (TTS), on the basis that they are satisfied that the merger will result in substantial public benefits and on the condition that TAH divests its Odyssey gaming business.
We see scope for upside in TAH share price as a result of synergy cost savings and the prospect of a large scale share buy back program in 2018.
The XJO has formed a minor lower high and lower low formation. 5836 now acts as resistance.
At 20x forward earnings and 2.5% dividend yield, we feel Computershare is overvalued.
The market is too bullish on the cost out story and anticipated earnings growth. The August earnings result will likely be a reality check.
Amcor has remained one of our preferred portfolio holdings. We see 8% EPS growth over the next 12 months and the stock trades on a forward yield of 3.8%.
The current price is beginning to approach full value and we recommend selling the $17 call options into December to enhance the return.
We’ve been buying QBE and IAG over the past few weeks. further upside is likely to be limited from the current level and therefore, taking profit or selling covered call options is advised.
The XJO has now created a “lower low and a lower high” formation. We remain cautious on the index unless the price action can trade back above 5850.
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