Our Algo Engine flagged the negative technical structure in leading financials firms Commonwealth Bank and Goldman Sachs. These are both leading industry names which have bearish price action developing.
Investors should remain on the short side of these assets.
The charts below illustrate the recent Algo Short signals along with the resistance or selling pressure, which is now building.
Our Algo Engine is now flagging the “lower high” technical structure in Bendigo Bank.
The stock has seen a short squeeze following the recent earnings result and is now likely to find renewed selling pressure at $12.40.
Investors should remain on the short side of this trade with a stop loss on a break back-up through the $12.50 range.
We also have a short signal in Bank of Queensland.
A reminder that both HVN and JBH have current Algo Engine short signals.
Selling pressure remains steady in these names and we prefer the short side from current levels.
We’ve been warning about a number of ASX large cap stocks which trade on 25X earnings and 2% yield and, at best, will deliver low single digit earnings growth.
Two examples are the recent sell signal posts we’ve made on Computershare and James Hardie.
We feel that the day of reckoning is approaching and, in many instances, as seen in CPU & JHX, the selling has already started and we’re now seeing a retracement back to the mean, (and likely beyond).
We’ll leave the 150x PE of Amazon, or the 200x PE of Netflix for a future posting, but suffice to say; reality will soon hit.
We continue to track GNC following the recent Algo Engine buy signal.
GNC has proven tricky in identifying the price reversal, however, we feel it is approaching an oversold level and ready for a bounce higher.
$8.50 is support and investors could build long exposure now with tight stops. a break below $8.50 may set-up a new buying range in or around $8.30.
Keep this one on your watch list.
The chart below shows the recent Algo Engine short signals in DMP. We look for the price action to test lower levels in the near-term as the lower high structure remains the predominate technical pattern.
Stay on watch as the last and final leg lower in the selling occurs. Investors can expect a sharp rally higher from oversold conditions, once we see DMP trade below $38.
Although we don’t have a current Algo Engine short signal in AZJ, we remain cautious of the 100% payout ratio the company continues to maintain.
Investors should look at the short side with a stop loss above the $5.23 high.
Shares of Telstra have touched a 5-year low near $3.82 in early trade.
Prior to today’s ASX open, the telco giant announced lower profit numbers and a reduction of the current year dividend from 31 cents to 22 cents.
In addition to the ordinary dividend next year, Telstra chief, Andy Penn also announced that the company would return up to 75% of one-off NBN receipts to shareholders via fully-franked special dividends over the next 12 months.
Further, Mr Penn gave an overview of the potential to monetize its NBN payments to support a “capital management” plan to “enhance shareholder returns”, most likely through a series of share buy backs.
With Telstra shares trading at $4.20, a 22 cent yearly total dividend pencils out to a 5.2% yield plus franking credits.
Our base case is that the domestic telco technology sector will continue to show above trend growth relative to peer sectors.
We expect Telstra’s leaner business model will contribute to the company’s profit potential over the next year.
We consider the share price oversold relative to fundamentals and prefer the long side from these levels.
Telstra
Comments included in the RBA minutes about the level of the Aussie Dollar were the catalyst for the 1.0% drop in the AUD/USD overnight.
The central bank doubled-down on their concerns that the recent rise in the currency has hindered exports and been felt in domestic consumption data.
Internal momentum indicators are pointing lower as the price support level at .7825 was broken in late NY trade.
Investors looking to profit from the AUD/USD trading lower can look to buy the BetaShare ETF with the symbol: YANK.
YANK is an inverse ETF, which means the unit price increases as the price of the AUD/USD decreases.
YANK also has a 2.5% weighting, which means a 1% change in the AUD/USD will correspond to a 2.5% move in the unit price.
The current price of YANK is $13.05. We calculate that when the AUD/USD trades back to the January low near .7300, the unit price will trade at $16.75.
BetaShare
Our Algo Engine triggered a buy signal in Wynn Resorts, (NASDAQ listed), at $125.
We see the signal level as support and investors should apply a stop loss on a break back below this price point .
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