ETF Watch: Buy OOO For Mean Reversion Trade In Crude Oil

Posted on | by Todd | Leave a Comment on ETF Watch: Buy OOO For Mean Reversion Trade In Crude Oil

Over the last 10 trading sessions, WTI Crude Oil has dropped over 13% from $52.00 to last nights low of $45.20.

Technically, we see good support near the $43.75 area, which was the reversal low posted on May 5th.

Fundamentally, increased political tensions between OPEC members Qatar, Saudi Arabia and Iran could escalate into military engagement with some associated levels of supply disruption in the near-term.

As such, we have been looking to buy the dip in some of the local energy names like Origin Energy and  Oil Search. (The ALGO engine gave a buy signal on OSH yesterday)

Further, we have also suggested that investors looking for a mean reversion higher in Crude oil prices can buy the BetaShare Oil ETF with the symbol OOO.

OOO traded as high as $8.10 just a week ago and has now in the low $7.00 area.

BetaShare Crude Oil ETF

 

Origin Energy

Oil Search

 

Amcor – Buy Write

Posted on | by Leon Hinde | Leave a Comment on 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.

Chart – AMC

 

 

 

 

A New Bullish Case For Gold

Posted on | by Todd | Leave a Comment on A New Bullish Case For Gold

Spot gold rose to its highest levels since November near $1,295 per ounce on Wednesday, good for a 13% gain so far in 2017.

In so doing, Gold broke a technical downtrend that has been in place since the  September 2011 peak of $1,900 per ounce.

The support in the yellow metal may be evidence of market fear rather than reflationary exuberance. The Chinese Gold and Silver Society Exchange expects 2017 mainland gold imports to increase by 50% from the prior year, amidst increased safe haven demand.

Daily chart analysis points to the next resistance level near the September highs of $1,322.

We continue to accumulate shares and call options on NCM. We also suggest shares in EVN and the BetaShare Gold ETF with the symbol QAU.

 

 

Bank Stocks – Where’s Support

Posted on | by Leon Hinde | Leave a Comment on 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.

Chart – MVB

 

 

 

James Hardie Support At $18.00

Posted on | by Todd | Leave a Comment on James Hardie Support At $18.00

Regular readers will recall that we’ve had a bearish bias on JHX since it broke the $22.50 level in the early part of May.

At that time, the stock was trading at 27 times earnings on a 2.2% annual yield

A weaker US house construction market combined with a general contraction in US retail sales has kept shares of JHX offered over the last several weeks.

We maintain our downside target of $18.00 per share over the medium-term.

James Hardie

 

Bendigo Battered Again

Posted on | by Todd | Leave a Comment on Bendigo Battered Again

Bendigo and Adelaide Bank (BEN) shares are down a further 2.7 % after losing  a whopping 4.4 % yesterday.

In addition to general weakness in the banking sector, shares of BEN are feeling the fallout from alleged accounting discrepancies from their reverse mortgage division, Home Safe.

From a technical perspective, the next significant level of support will be found around the August 8th lows of $9.75.

We would urge caution to investors considering buying BEN above the $10.00 handle.

Bendigo and Adelaide Bank

 

 

Take Profits On TWE

Posted on | by Todd | Leave a Comment on Take Profits On TWE

Back on February 15th, TWE announced that their first half net profit doubled to $136 million. Since then, the share price has traded from $11.20 to an all-time high of $13.63 yesterday.

We suggest taking profits in this price area or writing at-the-money covered calls to enhance the portfolio returns.

There’s no question that TWE has been a well-managed, success story in the beverage space and we’ll follow the ALGO engine to buy back in at lower levels.

Treasury Wine Estates