Algo Buy Signal – BSL
Our Algo Engine triggered a buy signal in BSL on the 19th April at $11.00, the stock is now trading $12.38. Stop-loss orders should be applied on a break back below $11.00.
Algo Buy Signal – IPL
Our Algo Engine flagged a buy signal in IPL on 23rd May. The price action looks to be developing support at or near $3.50 and the fundamental earnings picture is likely to improve in FY18 & FY19.
Chart Watch – XJO
The XJO has made a minor lower low after trading 5629 in Thursday’s session.
We may see some buying support in the banks and BHP which will help support the index, although resistance or selling pressure will pick-up in the 5700 – 5790 range.
Australian Banks – Key Levels to Watch
Mid next week in the US the FOMC will announce their decision on US interest rates. The market is expecting a 25 basis point increase.
Buying interest in the US banking stocks has increased over the last few trading sessions, as increasing rates are perceived to help bank profit margins. CitiGroup hit a new post GFC high, whereas, Goldman Sachs and JP Morgan have only seen moderate bounces from their recent lows.
CBA will need to hold the $77.65 low.
BHP – Resting on Support
Our Algo Engine flagged a buy signal in BHP on the 3rd of May at $22.50. The stock is now trading at $23.50 and has developed a reasonable support structure, as displayed in the chart below.
We stay exposed to BHP on the long side and look for further upside. Apply stop-loss below $22.50.
Amcor – Buy Write
We continue to see Amcor as a solid contributor to portfolio returns, especially when complimented with a slightly out-of-the-money call option into November or December.
A combination of the dividend and call option premium produces 10 – 12% annualised cash-flow.
FY18 forecast revenue US$9.6b, EBITDA US$1.5b, Net Profit US$790m, EPS US$0.66 and DPS US$0.49 places the stock on a forward yield of 4%.
Buy on any marginal price retracement.
Bank Stocks – Where’s Support
On the 30th of May we looked at the MVB Veneck Vectors Banking ETF and identified the 50% retracement target to be $26.00. Yesterday, the MVB traded at a low of $26.56.
The 50% retracement of the prior peak -to-trough does not guarantee price support. However, more often than not, buyers will step back in at or near this point.
The conundrum facing local ASX investors is the dislocation between US equities and Australian equities. As such, “buy on the dip” domestic investors will need to remain cautious of the extended US equity valuations.
Telstra & Woolworths
Within a back drop of equity market volatility, Telstra and Woolworths look like a safe harbour for client portfolios.
We see 5 – 8% upside for capital gain plus upcoming dividends in Aug/Sep.
Chart Watch – XJO Index
The XJO chart below shows the index breaking-down after finding selling pressure at the recent lower high formation on the 2nd of June.
June Quarter US Market Update – Video
The Dow Jones index continues to hold the higher low technical formation.
We review which stocks within the Dow Jones top 30 index are presenting relative strength, supported by our Algo Buy signals.
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