BHP & RIO – Algo Signals

Posted on | by Leon Hinde | Leave a Comment on BHP & RIO – Algo Signals

Our Algo Engine is now flagging “higher low” structures in a  number of the large cap commodity names; across both metals and energy sector.

In particular, BHP and RIO are now at levels where a technical bounce is likely to occur.

Although, we struggle with the timing of establishing new long positions, given our current valuation concerns at an index level.

We’ll watch the price behaviour in BHP and RIO this week and look for evidence of the short term momentum indicators turning positive.

Chart – BHP

Chart – RIO

 

Buckle-Up For A Busy Week

Posted on | by Todd | Leave a Comment on Buckle-Up For A Busy Week

The FOMC is pretty much certain to raise the Fed Funds target rate to 1% on Wednesday.

The US employment report released last night was mixed, with the headline number of 235,000 new jobs above expectations, the hourly earnings growth below expectations at .2% and the Unemployment rate unchanged at 4.7%.

These data were solid enough to hold the US indexes within recent ranges and even move the odds of a June rate hike slightly above 50%.

However, there are several other events next week which could also move the market.

On Tuesday, UK PM Theresa May will be addressing the House of Commons. There is a good chance that she may announce Article 50, which will formally start the Brexit process.

On Wednesday, Dutch citizens go to the polls to elect a new PM. The anti-EU candidate, Geert Wilders has a very good chance of winning.

Also on Wednesday, the US Debt ceiling agreement from 2015 will expire, further clouding an already murky legislative agenda in the USA.

On Thursday, the Australian employment report will be released, which will have an acute bearing on future domestic interest rate policy measures.

 

Index Chart Update – XJO, Dow Jones & NASDAQ

Posted on | by Leon Hinde | Leave a Comment on Index Chart Update – XJO, Dow Jones & NASDAQ

The Dow Jones had a minor retracement from the 1 March high of 21,169 to close the week out at 20,902. Wednesday in the US will see the Fed Reserve hand down their decision on US rates, with the market now pricing in a 92% chance of a .25% increase.

Interestingly, defensive names such as consumer staples have been some of the best performing stocks, (on a relative basis), when compared to other market sectors over the past month. In many cases, we’re now seeing PE ratios extend to 22x earnings and yields compressing down to 2.2%.

Dow leaders such as Boeing & Goldman Sachs are selling off after their terrific rally and GE, which has under performed lately, showed strength in Friday’s session.

Due to stretched equity valuations, we’re most likely to see further consolidation in the major indices.

Chart – Dow Jones
Chart – NASDAQ
Chart – XJO

 

Tabcorp And Tatts

Posted on | by Todd | Leave a Comment on Tabcorp And Tatts

Shares of Tabcorp have had a good week and are pushing up against the $4.50 level in early trade.

Before the open yesterday, the ACCC, Australia’s competition watchdog committee, gave an upbeat report that some of the “red-light” issues facing Tabcorp and Tatts‘ proposed $11 billion merger can be easily resolved.

However, the ACCC did say that the merger details would require more time to get the rubber stamp.

One of these hurdles could be overcome by Tabcorp selling its Queensland electronic gaming monitoring business, Odyssey Gaming.

As a defensive name, we have been buying Tabcorp for client accounts in the $4.20 to $4.50 range since early February.

Chart – TAH

Crude Dump Pushes Oil Search Lower

Posted on | by Todd | Leave a Comment on Crude Dump Pushes Oil Search Lower

The price of West Texas Crude Oil fell over 5% last night as the US Energy Information Administration (EIA) reported an 8.2 million barrel increase in domestic crude supplies. This lifted the total crude inventories to a new record of 528.4 million barrels in storage.

The front-month April contract broke the recent consolidation pattern to trade down to a 3-month low of $50.05, just above the important $50.00 support level.

A corrective bounce higher after such a large 1-day move is likely. However, with storage at all-time highs, more supply coming online and consumption numbers falling, a $48.00 price handle looks more probable than a $52.00 handle over the medium-term.

Shares of Oil Search have held above the recent low of $6.80, but look vulnerable to further downside.

The Investor Signals Algo Engine triggered a short signal at $7.72 on October 10th.

Technical studies suggest a break of the $6.75 level will see the stock revisit the November lows near $6.20.

Chart – OSH