Long CTX
We are buying CTX.ASX at market today. Look for a rally into the $34 range and either take profit or sell at the money calls to enhance the income from the estimated $0.50 September dividend.
Consider a stop loss on a trade below $29.00
Australian market finished the week…
S&P200 XJO.ASX finished the week up 2.6%.
The best performer was the Materials sector + 5.4%. Fortescue Metals Group FMG.ASX outperformed rising 11.0%. Information Technology lagged, weighed down Computershare Ltd selling off over 6%.
As a reminder CPU was one of our short trade recommendations, to read more on CPU, click the “tags” section in the right column.
Long SGR
I recommend accumulating SGR at $5.40 and holding for a rally back towards the $6.20 range.
Long AMC (update)
Reminder that I recommended buying AMC in the $14.25 to $15.00 range. It’s now trading $14.30 and you should begin accumulating today.
Short CPU (time to take profit)
On 27th of May 2016 I recommended going short CPU, the stock has now sold off over 15% in 4 weeks. It’s time to take profit.
Buy back short exposure at or near $9.00
Short XTL (update)
I suggested shorting the XTL on 2nd June 2016 and now I believe that Central Banks will have no choice but to embark on a more aggressive stance. BoJ, BoE and ECB will be looking to reduce volatility, inject liquidity, depreciate ¥ and avoid excessive US$ appreciation. The Fed will work hard to reduce the degree of monetary policy divergence.
This means we are getting ready to close out the XTL short and bank the profit.
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Short AZJ.ASX
Time to look at AZJ on the short side. $4.80 range is the target I’ve been waiting for, the stock has pushed higher against a backdrop of selling in the broader equity market but with no revenue growth, 100% payout ratio on the dividend, I think AZJ is susceptible to a pullback into the July/Aug earnings result. Target pullback to $4.40 – $4.50
Long TLS. ASX
Income buyers will start to look at TLS ahead of the August dividend. Buyers are redescent at the moment due to macro issues with Brexit but now is the time to start looking at long exposure in TLS on this exhaustion in the pullback to $5.25 – $5.30.
AUD/USD
Since the start of 2016, significant turns in the direction of the AUD/USD have worked as a good leading indicator to trend changes in the other G-7 currency pairs and the USD, in general.
Some foreign exchange commentators pin this forward looking correlation to the fact that over the last six months the AUD/USD trend has been acutely sensitive to Central Bank policy expectations and price swings of commodity metals and minerals……..Which have also driven the USD versus the other G-7 pairs.
Recall that the AUD/USD bottomed out at around the .6850 level in Mid-January over a month before the EUR/USD turned higher from the 1.0820 level in early March. More recently, the Aussie peaked out at .7835 on April 21st while the broader turn in the Major pairs didn’t reach the highs until May 3rd. Further, over the last two weeks, the AUD/USD bottomed on May 24th while the others didn’t turn until May 30th.
This is significant because the AUD/USD rejected the .7500 level during yesterday’s Asian session and posted a key reversal lower during the NY session with the close below .7430. And while the RBA held on rates on Tuesday, the price of copper extended its recent slide to 4-month lows just above $2.00 per pound.
Whether or not AUD maintains its role as a leading indicator for price action will be determined over the next few sessions. We still prefer the short side of the pair.
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