ALGO Signal: Sell Oil Search

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Our ALGO engine triggered a sell signal on Oil Search at yesterday’s ASX close at $7.11.

Over the past 2 months, the share price of OSH has been strongly correlated to, and benefited from, the rise in Spot Crude Oil.

With the internal momentum indicators in both markets approaching overbought territory, we expect to see a pullback in OSH.

As the chart below illustrates, there is stiff resistance near the May highs of $7.35 and the next key support level can be found just below $6.40.

Oil Search

 

ETF Update: Aussie Dollar Slips On US Rate-Hike Prospects

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The Aussie Dollar fell to a 1-month low against the USD at .7850 as comments from FED chief Janet Yellen increased the odds of a December rate hike to over 70%.

As the interest rate premium between the US and Australia continues to narrow, the AUD/USD will likely trade with increased downward pressure.

At this stage, the spread between the US and Australian 10-year yields has dropped to 50 basis points, the most narrow in over 5 years.

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 $12.90, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January low of .7160.

BetaShare ETF: YANK

 

 

 

 

 

Trade Update: Buy/Write Strategy For AMCOR

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On September 7th, AMC announced that they were in early takeover negotiations with US packaging firm Bemis Company.

The estimated value of the acquisition is in the AUD $5 billion range, which is not a quite 1/3 of AMC’s market capitialization of AUD $18 billion.

Shares of AMC have traded about 3% lower since the announcement and reached a 2-month low of $15.20 last Friday.

We believe the internal momentum indicators are approaching an oversold condition, and consider current prices a reasonable level for a buy/write strategy.

Amcor

 

 

 

 

Look To Buy TWE Below Current Levels

Posted on | by Todd | Leave a Comment on Look To Buy TWE Below Current Levels

Shares of TWE have dropped about 6% since posting an all-time high of $14.64 on September 11th.

There’s no question that TWE is one of the most solid performers on the ASX  and we have bought and sold it successfully for client accounts several times this year.

With the company making an accelerated push into the US premium wine market, we feel this pullback will offer another good buying opportunity in the near-term.

In addition, TWE is only $100 million into their $300 million stock buyback scheme, which should also offer price support at lower levels.

We see scope for a move back to $13.10 and will update when an ALGO buy signal is triggered.

Treasury Wine Estates

 

ALGO Update: BTT Has Hit Resistance at $11.35

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Our ALGO engine triggered a buy signal in BTT on September 8th at $10.15.

The share price reached a high of $11.35 last Friday but is now looking technically stretched.

We suggest exiting long positions at current levels or raising stop-loss orders to $10.88.

A more significant support level can be found at $10.10, which may attract fresh buying interest.

BT Investments

 

 

TRADE UPDATE: Exit Longs In SUNCORP

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On September 18th, The ALGO engine signalled a “higher low” structure in shares of Suncorp at $12.60.

Two days later the company paid a 40 cent special dividend and pledged to boost dividends throughout 2018, which lifted the share price.

Despite posting a high of $13.10 on Monday, the upside technical momentum looks to be running out of steam.

As such, we would suggest taking profits at current levels or raising stops to break-even. The chart below illustrates that the next key support level is near the $12.40 area.

Suncorp

 

WPL And ORG Are Looking Good, Technically

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Over the last several months, there have been many questions asked about the likely direction of energy-related stocks.

The fundamentals in the Crude Oil market are difficult to forecast and the political climate, domestically, may impact the future revenue of electricity markets.

However, from a technical perspective, both ORG and WPL look like they may be setting up for a move higher.

We currently see reasonable upside targets at $30.75 in WPL and $8.00 in ORG.

Woodside Petroleum

Origin Energy

 

ALGO Update: Buy The Dip In IPL

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On August 5th, we posted a buy signal on IPL at $3.20. Since then the stock has traded as high as $3.72, but slipped lower into the weekend.

One of the market stories supporting IPL has been that company officials have been actively buying shares, which is usually a good reflection of the company’s earnings and growth outlook.

More importantly, analysts’ earnings growth expectations of 90% over the next three years also illustrates a buoyant outlook for the business.

We still prefer the long side of IPL and suggest that investors could look to buy a pullback into the $3.45 support level.

Incitec Pivot

 

Chart Watch: The XJO Index

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The XJO 200 Index continues to trade within a broad, sideways “Flag” pattern bound by the June 8th low of 5624 and the June 15th high of 5834.

The low price for the week at 5637 was the result of weakness in the banking names, as well as, a drop in major miners BHP and RIO; which lost 2% and 1.5% for the week, respectively.

The continuation of the “lower high” price pattern suggests a downward bias with the next key support level near the February low of 5578.

ASX XJO Index

Trade Update: Stay Short FMG

Posted on | by Todd | Leave a Comment on Trade Update: Stay Short FMG

The steady decline in Iron Ore prices over the past two weeks turned into a rout as concerns grow about new supply combined with fears that Chinese steel production may have peaked for the year.

The Steel Index benchmark price for Northern China 62% Iron Ore sank by 7.4% to trade at $63.00 per ton on Thursday, an 11-week low. On a Year-to-date basis, Iron Ore has dropped over 20%.

On September 11th, we posted a sell signal on FMG at $6.05, with an initial target of $5.40. FMG shares closed at $5.12 on Friday and now target the July 24th low of $4.88.

Fortesque Metals Group