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.
Long QUB.ASX
The market appears to be under heavy sell side pressure at present with Asian markets down almost 3% today, therefore, any buy side transactions carry added risk. To combat this, reduce position size and/or leg into the trade in two transactions at different entry points. QUB has been on my radar and I’ve been waiting for it to pull back into the $2.25 level.
Tomorrow when the ASX resumes trading, start checking QUB out for an initial buy at or near the open. Remember, ease up on the dollar allocation.
News on AMC.ASX
Packaging giant Amcor will take a hit of between $US170 million and $US200 million ($A227.49 million-$A267.63 million) in pre-tax profits over the 2017 and 2018 financial years, after announcing several measures to streamline its flexibles business.
Keep this one on your radar. It’s likely that a buy signal will occur following the aggressive sell-side response to the earnings news. This is a market darling and leveraged investors will be getting squeezed. An oversold condition will soon emerge and we expect to see a signal within the $14.25 to $15.00 range.
Long SEK.ASX
This is a difficult one to pinpoint the ideal entry level, so you may want to think about managing the entry price with two separate buy transactions. The momentum supports a bounce at or near the $14.50 to $15.00 range as an entry point. This will be a slow consolidation, followed by a bounce higher. Be patient, mange the entry price and SEK should deliver further upside momentum.
The string of weaker Australian economic data came to an abrupt stop this week as both the GDP and Trade Balance data printed better than expected. And while the internal components of the reports weren’t as strong, the AUD/USD has had a bid tone all week. Our trade suggestion is to sell into the rally.
BEN.ASX (time to take profit)
We recommended shorting BEN.ASX on the 1st June. The stock has now sold off 10% in 3 trading days, “time to take profit”.
Short AZJ.ASX
AZJ is within 5% of the target to begin shorting the stock. Increased cost of debt, 100% dividend payout ratio and limited top line revenue growth should see the stock trade from our $4.60 to $4.80 short range back to sub $4.40 in the near future. Keep this one on your radar.
ASX Listed ETF Signals
BEAR.ASX is an inverse ETF based on the ASX 200 index. We note in today’s signals, BEAR.ASX has been triggered as a new bull trend. If you’re confused on this, remember it’s “inverse”, meaning it will rise in value as the XJO 200 falls.
XTL.ASX
The ASX top 50 index is displaying short side momentum. Focus your efforts on the Investor Signals “BEAR Trend” within the ASX top 50 equities email service.
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