Algo Update – MFG, BTT, SUN & MQG
Our Algo Engine has flagged the higher low structure in MFG, BTT, SUN and MQG.
Traders may want to take a closer look at these names and place sell stops below the low formed in the past few trading sessions.
Algo Update – Sonic & Ramsey Healthcare
Our Algo Engine has triggered recent buy signals in SHL and RHC, we feel both of these names are now trading into an oversold price range and buying support will soon develop.
Oil Markets Begin to Rebalance
We’re now watching the price structure in energy related names as we feel Iran’s ambitions in the Middle East may develop into a flash-point to greater confrontation.
The standoff between Qatar and the rest of the Gulf Cooperation Council continues and should a conflict involving Iran occur, the risk to crude oil supply is significant.
If there is a disruption of crude oil from Iran and Iraq, the oil market goes from balanced, which it is now, to a shortfall in supply.
The graph below illustrates the potential for demand to begin outpacing current production.
RIO – Cash Return to Shareholders
RIO is likely to free up additional capital through the proceeds from the complete exit of coal and high cost aluminium smelting.
We estimate that this could raise more than $7.5 billion, potentially more than doubling shareholder cash returns in FY19
Recent sentiment around iron-ore and aluminium have helped drive RIO’s share price. We consider RIO near the top end of the valuation range.
However the share price should remain well supported, and when complimented with a covered call, we’re delivering 12% annualised cash flow.
FY 18 EBIT forecast of $9.8 billion, EPS $4.50 and DPS $2.45, places the stock on a forward yield of 4%.
Rio Tinto
Algo Short Signal – Bendigo Bank
On the 16th of August our Algo Engine triggered a sell signal in BEN at $12.50.
The current price action is a counter-trend bounce within a protracted downtrend.
The $11.75 area provides another opportunity to consider the short side of Bendigo Bank.
BEN
Woolworths – Approaching Support
Keep Woolworths on your radar as we’re likely to see an exhaustion to the current selling pressure and a bounce higher.
Woolworths
Algo Update – SHL & TAH
Our Algo Engine triggered a buy signal in SHL near the recent low. We continue to see a buy-side opportunity here at $21.00
TAH has bounced from the $4.05 level highlighted in last weeks blog post and is now moving high, towards our $4.50 target.
BOQ – Sell into Strength
We feel traders should look to sell into the current price rally in BOQ.
Slowing credit growth conditions will act as a headwind to mortgage profitability and with BOQ now trading at the top end of the valuation range, any further price extension provides a good opportunity to set a position on the short side.
We have BOQ delivering flat EPS growth of $0.93 and DPS of $0.77, placing the stock on a forward yield of 5.6%
Bank of Queensland
Algo Buy Signal – Crown
Our Algo Engine triggered a buy signal in Crown near the recent low of $11.43.
Apply a stop-loss on a break below $11.40
Crown
Tabcorp – Oversold
Tabcorp is likely to trade higher, into the $4.50 range following independent expert Grant Samuel indicating the proposed $11 billion merger of gaming giants Tatts Group will deliver fair value for Tatts shareholders.
Tabcorp says the merger is expected to deliver at least $130 million in annual earnings from what it calls synergies and business improvements, tech integration, corporate cost savings and other consolidations.
It will take about two years to fully integrate the old Tabcorp and Tatts businesses, according to Tabcorp.
Tabcorp
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453