The chart below shows the XJO in after hours trading, which captures the US close on Friday night.
We anticipate the XJO opening Monday below the short-term momentum indicators, which could be the early signs of a large number of short positions within the ASX 200, beginning a corrective move.
We highlight the lower high formed from Friday’s close and the break below the short-term momentum indicator.
This should be monitored on Monday when the US reopens and investors should also be looking at the same patterns in the NASDAQ.
We’ll cover more on these trends in Monday night’s webinar.
Nike is expected to report EPS of $0.18, down 70% from the prior quarter. Revenue down 20% to $8bn.
We see Nike as a shorting opportunity coming into the June quarter earnings result.
The above post was made on the 29th May and since then, the US market has pushed higher. With retail likely to fall short of earnings estimates, we remain cautious heading into next month’s earnings.
The below chart shows the updated price action in Nike, and of importance, the close below the momentum indicators.
Evolution Mining is on our radar as we soon expect the stock to switch from sell to buy conditions.
Sub $5.00 EVN looks interesting relative to other gold play alternatives.
ResMed short term traders may wish to take profit on RMD, following the 6% rally.
For regular readers of our blog and viewers of the Monday night webinars, you would be very familiar with the earnings table below.
The S&P500 index is trading at an assumed $170 of earnings per share for FY21 and $180 of EPS for FY22. We feel these targets are too optimistic and the range could be more like $125 to $150, with a slower rate of recovery into 2022.
The close on Thursday and Friday now has the major US indices trading below our short-term momentum indicators.
Our target for the S&P500 is 2500 support and 3300 resistance.
The US dollar has been trading lower over recent weeks and should we see a pick up in market volatility and risk-off sentiment builds, the US dollar may find increased buying support.
The following ETFs provide a way to capture exposure to the trade.
Betashares Strong U.S. Dollar Fund (Hedge
Coles Group is under Algo Engine buy conditions and the recent pullback to $15.00 provides an attractive entry-level.
With the stock trading on a forward dividend yield of 3.5%, we expect the share price to remain well supported.
Investors remain overly optimistic that corporate earnings and profits will catch up with elevated asset prices.
Given the massive interventions into markets by the Federal Reserve, the added liquidity has been successful in fostering a lift in equity prices. Unfortunately, there will be little translation into higher wages, full-time employment, or corporate profits.
A broadening of the rally into industrial and financials is continuing to propel the indices higher. However, the prospect of the economy catching up to market expectations in the next 12 months, is very low.
Investors should apply the following “rule” as a form of portfolio protection.
A break below the 10 day moving average will be a sign that market momentum is stalling.
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