Transurban – oversold & buying support building
Our Algo Engine triggered a recent buy signal in Transurban, and with the stock now trading $11.10, we consider it a buying opportunity.
TCL goes ex div $0.265 on the 29th June.
Transurban
Can Spot Gold Break Above $1370.00?
Over the last 6-months, the price of Spot Gold has been capped just below the $1370.00 level three times.
With the current price around $1350, the question now is: will Gold be capped again, or will it break over $1370 and head higher?
Looking at Friday’s Commitment of Traders report offers an interesting perspective. The numbers show that the speculators are long and the commercial accounts are very short.
As a rule, since the commercial accounts actually hold the Gold, they are more likely to cover their short exposure quickly.
As such, we see a growing likelihood that Spot Gold will trade back over $1370 for the first time since July 2016, over the medium-term.
This extension of the recent rally will lift local mining names such as NCM, SBM, EVN and SAR.
Newcrest Mining
Santa Barbara
Evolution Mining
Aussie Dollar Points Lower On US Rate Divergence
With the US FOMC raising its Fed Funds target from 1.5% to 1.75% last week, the overnight rate in the USA is higher than the benchmark rate in Australia for the first time in over 25 years.
This removes a key pillar of support for the AUD/USD.
With the RBA firmly on hold throughout 2018 and the FOMC looking to lift rates at least 2 more times this year, we expect the downside pressure on the Aussie dollar to increase.
The AUD/USD posted a 3-month low of .7670 last week as internal momentum indicators continue to point lower. Current chart patterns suggest a test of the .7150 level over the medium-term.
Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.
YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate by 2.5% for every 1% change in the AUD/USD exchange rate.
With a current price of $13.40, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January 2017 low of .7160.
BetaShare ETF: YANK
Crown – Back at support level
Our Algo Engine recently triggered a buy signal in Crown Resorts and with the stock now back on support, we recommend investors buy CWN near the $12.50 level.
Crown Resorts
ALGO Buy Signal For Medibank Private
Our ALGO engine triggered a buy signal for MPL into the ASX close at $2.97.
This “higher low” structure is referenced to the August 23rd low trade of $2.66.
The half-yearly results released on February 16th were mixed: net profits grew by 6% but net investment income was 15% lower at $69 million.
As such, we would consider MPL a buy/write opportunity when the share price rises back into the $3.10 area.
MPL will pay a 6.75 cent dividend on September 28th, which puts it on a 4.4% annual yield at current prices.
Medi-Bank Private
Dow Jones falls 11.6% – Where is support?
The Dow Jones Index dropped 724 points on Thursday and another 425 points in the overnight session to close at 23,533.
The benchmark index has now declined more than 3,000 points, or 11.6% from its high on Jan 26th, at 26,616.
We’ve been warning about the stretched PE valuations in US markets and we forecast further selling in the tech-heavy NASDAQ, which will drag markets lower.
The Dow closed at 19,827 on Inauguration Day, 20th Jan, 2017, which means it has about 3,700 points further to go before the Trump rally gains disappear.
22,000, or a 50% retracement of the breakout rally which began in late 2016, provides a reasonable downside target where buying interest is likely to provide support for the index.
The NASDAQ is 10% above the 50% retracement price target.
XJO finishes the week down 2.2%
The S&P/ASX 200 Index finished the week to Friday down 2.2%.
The best performer was the Energy sector, up 1.9%, and the worst performer was the Telecoms sector, down 3.7%.
Our forecast for market weakness continues and we again highlighted the cascading lower high pattern in the XJO.
XJO Index
ALGO Update: Stay Short SunCorp
Shares of SUN hit a 3-week low of $13.43 as the downside momentum in local financial names continues to increase.
SUN announced today that they will snug interest rates higher on all variable rate home loans next Wednesday due to higher funding costs.
Our ALGO engine triggered a sell signal in SUN on November 10th at $14.05.
We will look to cover short positions near the February low of $12.45.
SunCorp
ALGO UPDATE: Take Profits In Short Sonic Trades
Our ALGO engine triggered a sell signal in SHL on February 5th at $24.85
In our blog post from March 3rd, we set an initial downside target of $23.10.
Shares of SHL hit $23.00 yesterday and we closed out of our short CFD positions on the SAXO Go platform.
At 21X estimated 2018 earnings, the stock looks more attractive at $23.00, than at $25.00
However, given the heightened volatility in the ASX market in general, we will remain flat in SHL and advise clients when we look to enter another position.
Sonic Health
Higher Funding Costs To Weigh On “Big 5” Bank Shares
Local banking stocks will be facing higher funding costs as LIBOR rates have surged higher over the last few weeks.
Considering the negative combination of the Royal Commission and lower margins on Mortgage lending, we have been urging caution to investors looking to buy the recent dips in the Big 5 banking names.
As illustrated in the chart below, the cost of local bank funding has posted the sharpest monthly rise in over 8 years.
As such, we don’t believe the local bank shares have found sustainable price support levels yet.
Phone in for more details on trading the local banking stocks on a cash basis and on the SAXO Go CFD platform
LIBOR
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