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The XJO Index has been under Algo Buy conditions since forming a  higher low back in June 2016, at 5000 points. With the Index building a base around 5500, (over the past few weeks), we’ve again used the “dip” to buy the index.

Replacing individual stocks in favor of the STW, (an ETF covering all ASX200 shares), will likely provide better investor returns.

For more detail on the STW and how to add call options to enhance the income, please call our office on 1300 614 002.

Our Algo Engine generated a buy signal in MQG recently and with the price forming a higher low at $103, we have been accumulating the stock.

Macquarie is likely to grow earnings at 10%+ in FY19 and is supported by a 5% dividend yield.

BHP, RIO and FMG have recently created lower high formations and consequently, have been removed from our ASX 100 model portfolio.

The weak December manufacturing data out of both the US and China will likely weigh on Iron Ore prices.

The graph below shows the trend in global PMI.

Our preference is to allocate towards the index, (rather than BHP or RIO),  or at an individual stock level, we are overweight healthcare and as our market recovery thematic, energy names such as WPL, STO & OSH.

BHP

RIO

FMG

ASX and Macquarie Group are both under Algo Engine buy conditions and are current holdings in our ASX 100 model portfolio.

ASX is likely to deliver 5% EPS growth and trades on a 3.5% yield.  When combined with a covered call the cash flow yield increases to 9% per annum.

Macquarie is likely to deliver 10% EPS growth and trades on a 5% yield. We see scope for 10 – 15% capital growth over the next 12 months.

TWE is under Algo Engine buy conditions and is a current holding in the ASX 100 model portfolio.

With the share price finding buying support at the recent $14 low, we consider TWE a compelling buy-write opportunity. The February earnings result should deliver mid-teen earnings growth and therefore, support the current 22x multiple.

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

Amcor is expected to finalise the acquisition of Bemis in the coming weeks.

The continuation of raw material costs coming down, should provide a more supportive backdrop and into FY20 and FY21 we forecast Amcor to deliver high single digit earnings growth.

We have Amcor now trading on a 4.8% forward yield, based on FY19 EBIT of $1.2bn and dividends per share of $0.45.

Although AMC is under current Algo Engine sell conditions, we highlight the strong share price support,  in a relatively weak market at present. 23

Bank stocks are down globally on average 30 to 50% from their recent highs. Even large cap US banks have seen heavy selling caused by global growth concerns and the impact of the inverted yield curve pressuring margins.

JP Morgan, (listed on the NYSE), is arguably the best operated bank in the world with one of the strongest balance sheets. Nevertheless, it has endured a share price fall from $120 in September to $91 in late December.

JP Morgan – finding support at $91 and is now under Algo Engine buy conditions.

BANKS, is a Betashares ETF providing broad based exposure to the global banking sector. The trend is obvious with a 30% sell off in 2018.

The MVB Market Vectors Australian Bank ETF shows that we’re still under Algo Engine sell conditions following the lower high formation in July.

The following bank names may see a bounce from oversold conditions, CBA, NAB and WBC.