Recent Algo Engine buy signals in BSL and AWC have performed well, with prices rallies of 20%+ in the past few months.
China has been ramping up production of both alumina and aluminium in the lead-up to potential capacity cuts. Alumina Ltd (AWC) is potentially the largest beneficiary, given it is a pure-play on the industry.
Rio Tinto and South32 also seem well-placed to benefit. We will reconsider these names on the next Algo Engine buy signal.
We’ve been buyers of BHP on the recent pullback to $22.50 with an upside target of $25 – $26.
We advise, either locking in gains within this price range, or alternatively, selling at-the-money call options into September.
Our ALGO engine triggered a sell signal in CBA on June 29th at $84.10.
Since then the stock has traded as low as $81.80 and has a clear downward bias. In addition, the share price of MQG has also moved lower since late-June and internal indicators appear to be picking up momentum on the downside.
The Aussie banks, in general, look to have a downward bias relative to the prices seen in late-May.
As such, we see the next technical support target for CBA at $78.50 and at $85.90 for MQG.
For more specific chart analysis of the local banking sector, send us an email or give us a call.
CBA
MQG
We continue to like the setup in CTX, WOW and IPL. We also feel that TCL and SYD are now approaching oversold levels.
Our Algo Engine triggered a sell signal in GE back in December 2016.
At that time GE was trading at or near $32.50 and since then the stock has sold off and is now trading $26.00.
Over the last 7 months, Gold has traded in a broad range between $1200 and $1300.
As inflation, interest rate expectations and equity market risks have fluctuated over that time, so has the price of Gold.
On balance, we expect the $1200.00 support level to hold and find buyers as the yellow metal moves back to the top part of the recent price range.
Investors looking for the price of Gold to move higher can look to buy NCM, EVN or the BetaShare Gold ETF with the symbol: QAU.
Spot Gold
FY17 refining margins have improved from last year after averaging US$12.40 versus US$10 over 1H16.
We expect CTX stock price to find support at the current price level and trade higher off the back of the earnings result announced in August.
Assuming DPS of $1.15, we have CTX on 3.7% yield, and when complimented with a covered call, we ‘re delivering 10 – 12% annualised cash flow.
The S&P/ASX 200 Index finished the week down 0.31%. The best performer was the Materials sector, up 2.1% and the worst performer was the Health Care sector.
The XJO remains below the recent 5850 “lower high” formation, as displayed on the graph below.
Our ALGO engine triggered a buy signal in Cimic Group yesterday on the ASX close at $38.20.
After posting a new 52-week high of $41.10 on May 24th, shares of CIM had pulled back over 8% to 37.50 before recovering into Friday’s close.
A report that CIM is preparing to offload its 23% stake in Macmahon Holdings and restart its share buyback plan helped the stock find buyers.
This, combined with the credit rating upgrade from S&P in late May, gives CIM a positive outlook going forward.
At 23x earnings, the shares are mildly expensive, but the upside potential to $41.00 sets up a reasonable “buy/write” investment opportunity.
CIMIC Group
Our Algo Engine has flagged a buy signal in TCL with the price trading at or near $11.60.
With a 10% underlying dividend growth supported by free cash flow, we feel TCL should trade back up into the $12.25 level, as bond yields retrace from their current short-term rally.
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