On the 16th of August our Algo Engine triggered a sell signal in BEN at $12.50.
The current price action is a counter-trend bounce within a protracted downtrend.
The $11.75 area provides another opportunity to consider the short side of Bendigo Bank.
BEN
The AUD/USD posted a 2.5-year high of .8125 on September 8th. On that day, the US 10-year bond yields had dipped to a six-month low of 2.03%
Since then, the 10-year yields have climbed higher and reached 2.19% in NY trade today. The AUD/USD has traded lower overnight and is testing support at .7980; a break of this level will give scope to the .7910 area.
There are many components of forex pricing but yield differentials will always have the biggest impact.
As such, if today’s domestic employment report posts lower than forecast, we expect to see more downside in the AUD/USD.
Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.
YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate by 2.5% for every 1% change in the AUD/USD exchange rate.
With a current price of $12.60, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January low of .7160.
BetaShare ETF: YANK
Since posting a low of $1204.00 on July 10th, Gold has rallied over $150.00 to hit an intra-day high of $1358.00 on September 8th.
Geopolitical tensions, Political uncertainty, weather events and volatile global equity markets have all been drivers of the Gold price over the last three months.
And while these events are still very present in the market, changes in their impact can be difficult to forecast.
Shares of Newcrest hit an intra-day high of $23.85 on September 6th. Since then we’ve seen over a $1.50 pullback to $22.10.
Ideally, we would like to see NCM shares at or around the $21.90 area to re-establish long positions on a scale-in basis.
Newcrest Mining
Keep Woolworths on your radar as we’re likely to see an exhaustion to the current selling pressure and a bounce higher.
Woolworths
Our Algo Engine triggered a buy signal in SHL near the recent low. We continue to see a buy-side opportunity here at $21.00
TAH has bounced from the $4.05 level highlighted in last weeks blog post and is now moving high, towards our $4.50 target.
We feel traders should look to sell into the current price rally in BOQ.
Slowing credit growth conditions will act as a headwind to mortgage profitability and with BOQ now trading at the top end of the valuation range, any further price extension provides a good opportunity to set a position on the short side.
We have BOQ delivering flat EPS growth of $0.93 and DPS of $0.77, placing the stock on a forward yield of 5.6%
Bank of Queensland
Shares of CBA have traded back over $75.00 in early trade on the back of solid gains in the US banking sector on Wall Street.
However, we see this as a brief corrective move within the broader 8% decline over the last month.
A report from Credit Suisse this morning suggests that the CBA could face a $200 million increase in its annual operating costs over the next two years because of legal fees and related costs to defend the AUSTRAC money laundering accusations.
Our ALGO engine triggered a sell signal in CBA on July 4th at $84.00. We see solid technical resistance in the $75.60 area and more range extension to the $70.00 handle over the medium term.
Commonwealth Bank
Our Algo Engine triggered a buy signal in Crown near the recent low of $11.43.
Apply a stop-loss on a break below $11.40
Crown
Tabcorp is likely to trade higher, into the $4.50 range following independent expert Grant Samuel indicating the proposed $11 billion merger of gaming giants Tatts Group will deliver fair value for Tatts shareholders.
Tabcorp says the merger is expected to deliver at least $130 million in annual earnings from what it calls synergies and business improvements, tech integration, corporate cost savings and other consolidations.
It will take about two years to fully integrate the old Tabcorp and Tatts businesses, according to Tabcorp.
Our Algo Engine triggered a buy signal in MQG near the recent low of $82.28.
During an outlook update provided to the market, MQG re-affirmed guidance for its FY18 result to be broadly in line with FY17. Management noted that, strong revenues in the FUM business will help underpin FY18 earnings.
FY18 cash earnings of $2.3b, EPS $6.70 and DPS $4.70, represents 3 – 5% earnings growth on FY17 and places the stock on a forward yield of 5.4%.
There appears to be short-term upside price momentum from the recent signal, however, stop losses below the $82.28 low are advised.
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