Advisory

Learn MoreFREE TRIAL

With oil rallying and the US dollar retracing, (yields in the US retreat), it’s reasonable to consider buying BHP and selling Qantas.

Apply stop losses on a price reversal through prior support/resistance levels as indicated on the charts below.

Orica has reported a FY17 NPAT of $386m with EBIT in-line with consensus $707m. The market is concerned about flat EPS guidance into next year and cost headwinds with increased operating expenses on R&D, IT and at corporate level, to exceed additional$100m+ . 

Recent Algo Engine buy signals in AMC and AMP are now presenting a buy-side opportunity.

Sonic Healthcare has found support at $21 and now provides a low risk income trade for client portfolios. Buy at the current price and sell a covered call option into June 2018.

Combined with the February dividend, we’re  generating 10 – 12% cash flow on an annualised basis.

In May this year we had an Algo Engine buy signal on ING at 3.50, since then the stock has rallied to $3.90 and has recently retraced back to $3.50 – 3.60.

The price action is likely to retest $3.50 and begin building a new base.

NAB delivered FY17 cash earnings of $6,642m, just below consensus estimates.

2H17 dividend of 99¢ was flat on the pcp and total annual dividends in FY18 will be $1.98, placing NAB on a forward yield of 6.2%.

NAB has a dividend payout ratio of ~79%, which may prove to be unsustainable. 

The market may have concerns following NAB announcing additional investment spend of $1.5bn over the next three years and a large restructuring provision in FY18.

WPL has traded to our medium-term price target and we recommend taking profit.

NCM is finding support as US interest rate expectations re-adjust lower.

SYD & TCL are rallying ahead of their December dividend payment period.

As the market re-prices for a slower trajectory in the increase of US interest rates, yield sensitive sectors are finding renewed buying interest.

Our Algo Engine remains long SYD & TCL. We recommend covering the position with an out-of-the money call option.

Australian equities increased by 4% in October with IT up 9.3%, Energy 5.8% and Healthcare 5.5%.

We’ve been allocating towards ORG, WPL, RHC & RMD to help capture these returns. There are incremental further gains in resources and energy, we’re cautious on banks and financials and forecast sideways to lower price consolidation.

High PE companies with US dollar earnings should now run into resistance. Examples being JHX, BLD, RMD, and CPU.