XJO & Dow Jones – Chart Update

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

The XJO remains near recent resistance as more than 50% of top 200 companies have reported their earnings. Average reported revenue is up 3.4% on the same time last year and underlying average profits are up 6%.

The Dow Jones chart shows the index breaking to the upside of the recent 20,000 consolidation range.

We remain cautious of the extended share price valuations and moderate underlying earnings growth.

For this reason we continue to tilt client portfolio’s towards defensive assets. We prefer reducing exposure to resource and banking stocks across the next quarter and increasing exposure to healthcare and consumer staples.

Our tight covered call overlay is boosting cash flow to 10 – 12% per year.

Chart – XJO
Chart – Dow Jones

 

 

Chart Update – Banks

Posted on | by Leon Hinde | Leave a Comment on Chart Update – Banks

Goldman Sachs and JP Morgan remain within the consolidation range which began in early December.

In our local market we’ve seen BOQ & BEN sell off 10% from the January peak-to-trough. NAB reported weak revenue growth and higher than expected expenses, leading to a 1% fall in profit.

CBA report their half year results on Wednesday, we expect NPAT of $4.8b and DPS $2.00. 3 – 5% underlying EPS growth on the same time last year.

ANZ corrected 10% from peak-to-trough.

We’ll watch the US banks in the weeks ahead to see which way they break from their current consolidation range.

Chart – Goldman Sachs
Chart – JP Morgan
Chart – CBA

 

 

Gold Catches Safe-Haven Bid

Posted on | by Todd | Leave a Comment on Gold Catches Safe-Haven Bid

Spot Gold prices hit a 3-month high of USD 1,235.00 as geopolitical tensions increased the yellow metal’s safe haven appeal.

Political uncertainty regarding upcoming elections in Europe, the US and Iran exchanging threats and unstable banking sectors in Italy and Greece have all added to investors’ interest in Gold.

From a technical perspective, the next key price target is at the November 11th high of USD 1292.00. We would suggest exiting long positions in that area.

Shares of Newcrest Mining have followed the gold price higher and have rallied over $3.50 during the last eight trading sessions. We expect to see the $24.50 level offer the next area of resistance and look to exit long positions in that range.

Chart – NCM

 

Mixed Payroll Data Lifts The Dow

Posted on | by Todd | Leave a Comment on Mixed Payroll Data Lifts The Dow

US January Non-Farm Payrolls increased 227,000, which was well above consensus expectations of around 175,000.

The December revision was little changed at 157,000 from the 156,000 reported last month and the three-month average increased to 183,000 from 148,000 previously.

Unemployment rose to 4.8% from 4.7% the previous month and compared with expectations of an unchanged rate on the month.

Average earnings rose 0.1% for the month and this was well below consensus forecasts for a 0.3% gain. The December increase in average earnings was also revised down to 0.2% from the originally reported 0.4%.

The annual increase in earnings, therefore, slowed to 2.5% from 2.9% previously and was well below the 2.9% expected rate.

The stronger headline jobs number combined with weaker wages reduced the pressure on the FOMC to raise rates at their March meeting. This is reflected in the Fed Funds futures market where the implied probability of a rate hike fell from 18% prior to the payroll data to 9% by the New York close.

This market sentiment that rates could stay “lower for longer” lifted US Stock Indexes with the Dow and SP 500 gaining just under 1% for the day and the NASDAQ adding just over .50%

Chart – Dow Jones

James Hardie

Posted on | by Todd | Leave a Comment on James Hardie

Shares of James Hardie have opened over 3% lower on an announcement that a weaker-than-expected December quarter has forced the company to cut earnings guidance.

Shares traded down to a 3-month low of $19.60 as the the company announced that the group’s net profits fell 6% to USD 52.6 million.

This prompted a warning that earnings for the financial year up to March  would come in at between USD 245 and USD 255 million, versus expectations of between USD 252 to USD 269 million.

Chart – James Hardie

Amazon Shares Lower On Weaker Guidance

Posted on | by Todd | Leave a Comment on Amazon Shares Lower On Weaker Guidance

Shares of Amazon are down over 4% to $805.40, in after-hours trade, as negative Q1 revenue guidance overshadowed a solid Q4 earnings report.

Q4 earnings were announced at $1.54 per share versus a consensus of $1.35 per share. Q4 revenues came in at $3.5 billion versus $3.6 billion, which reflects a 47% increase on a year-on-year basis.

The Q4 revenue miss disappointed shareholders, but the Q1 guidance miss is what is really driving the stock price lower.

The company gave Q1 guidance in the range of $33.25 to $35 billion, lower than the expected range of $34.52 billion to $36.95 billion.

Key chart support for Amazon is now seen at or near $700.00.

Chart – Amazon

Visa Hits All-Time High After Q1 Results

Posted on | by Todd | Leave a Comment on Visa Hits All-Time High After Q1 Results

Q1 earnings results for Visa Inc. beat expectations on both the top and bottom lines.

Visa posted earnings of 86 cents per share on Q1 revenues of $4.5 billion. Analysts’ expectations were for earnings of 78 cents per share on Q1 revenues of 4.278 billion, the higher revenue number reflects a 25% increase on year-on-year basis.

Visa shares have rallied over 3% today to an all-time of 85.40 as payment growth came in at $1.9 trillion, up 47% on a year-on-year basis for the three months ending September 30, 2016.

Looking ahead, Visa affirmed its positive outlook with annual net revenue growth expected in the 16 to 18% range for 2017.

US Market – Leading Indicators

Posted on | by Leon Hinde | Leave a Comment on US Market – Leading Indicators

We’ve been watching the rollover pattern in GE and the recent break of price support in Goldman Sachs as potential leading indicators. We now add UPS and FedEx as two additional stocks of interest.

FedEx Corporation is expected to report earnings in March. The report will be for the fiscal quarter ending Feb 2017. The consensus EPS forecast for the quarter is $2.62 whereas, EPS for the same quarter last year was $2.51.

United Parcel Services, (UPS), reported quarterly earnings and revenue that missed Wall Street’s expectations. Fourth-quarter earnings of $1.63 per share on revenue $16.93 billion and weak 2017 guidance, ($5.80 to $6.10 per share), has resulted in heavy sell-side pressure in the stock.

A point of note: In 2016, UPS re-purchased 25.5 million shares for about $2.7 billion.

The graphs below show a concerning trend of downside risk.

Chart – FedEx

Chart – UPS

 

Facebook Q4 Earnings

Posted on | by Todd | Leave a Comment on Facebook Q4 Earnings

Shares of Facebook traded to an all-time high of $137.00 just after posting better-than-expected Q4 earnings and revenue results.

The social media giant announced adjusted EPS of $1.41 per share on quarterly revenue of $8.81 billion. These numbers exceeded the street’s estimates of $1.31 per share on revenue of $8.532 billion.

In addition, Facebook announced that Daily active users increased 18% year-on-year to 1.23 billion, while monthly active users grew 17% to 1.86 billion.

However, during the earnings call, CFO, David Wehner indicated that expenses will increase in 2017.

Chart – Facebook