US Market – Warning Signs

Posted on | by Leon Hinde

Almost half of the stocks in the major US indices are already in bear territory and we’re now beginning to see the late stage selling in the remaining “high quality” group.

The graphs below of the US indices are under algo engine sell conditions and more recently, (past 10 days), the short-term momentum indicators are now pointing down and supporting the big picture back drop.

Interestingly, the Australian market has held up well, and the explanation lies in the surprise post election rally. Our concern is the sell-off in the ASX may soon catch up to the US.

Dow Jones

S&P500

NASDAQ

 

 

ANZ – Algo Buy Signal

Posted on | by Leon Hinde

Australia and New Zealand Banking Group is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

We see support at $26 and a push higher towards $28.50, will provide an opportunity to sell covered call options to enhance the income return.

ANZ goes ex-div, $0.80 on the 14th of May. An August $29.50 call option will add a further $0.50 per share of income.

For more detail on the call option strategy, please call our office on 1300 614 002.

Aristocrat Leisure – 1H19 Earnings

Posted on | by Leon Hinde

Aristocrat Leisure reported a strong 1H19 result with the North American division the standout. The result also benefited from a lower AUD/USD exchange rate.  Normalised profit after tax $422  + 16% in reported terms and +7.7% in constant currency. Up from $361m the same time last year.

In FY20 we forecast revenue to grow by 8% and EPS growth at a similar level. Based on this, we have ALL on a  forward dividend yield of 2.2%.

Risks to the business include increased regulation, competition and slowing
customer demand. We look to buy ALL on the next Algo Engine buy signal.

The company goes ex-dividend $0.22 on the 29th of May.

 

Computershare Sell-Off

Posted on | by Leon Hinde

Computershare had their investor day today and the market has reacted negatively to a softer earnings outlook.

We’ve been on the short-side of this trade following the lower high formation and the Algo Engine sell signal earlier this year. The CPU business is exposed to a number of structural headwinds and we expect further weakness in the share price.