XJO Remains below 5821
The lower high pattern in the XJO continues to cascade down with 5821 acting as resistance.
XJO
XJO – Resistance Levels
The XJO chart displays the recent pattern of negative price reversals.
The latest reversal in today’s trading session, created a “lower high” at 5982.
Technical traders will be leaning on the short-side of the market, until the index trades back through the 5982 resistance.
XJO Index
Buy GPT & WFD At Current Levels
We recommend buying GPT & WFD and placing a stop-loss orders below the recent support levels, indicated on the relevant charts below.
Investors may prefer to hold the position and sell call options to enhance the income, whilst staying exposed to the next round of dividends.
GPT will pay $0.123 dividend on 29th June.
WFD will pay $0.16 dividend on 11th August.
WTI Rally Lifts Local Oil Names
The price of West Texas Intermediate (WTI) Crude Oil rose 3.5% last week and settled just over $62.00.
This places WTI pretty much in the middle of the $66.80 to $58.00 range we have seen so far this year.
What makes this noteworthy is that last week’s rally coincided with a rally in the USD. In short, the USD vs Crude inverse correlation looks to be diminished for now.
The technical picture in WTI is improving and the next upside target is near the February highs of $63.40.
As a result, shares of STO, WPL and OSH are all up over 1.5% in early trade today.
All three of these stocks are in our ASX Top 50 Model Portfolio and we prefer the long side from current levels.
We’ll update each of these stocks in subsequent postings.
Woodside Petroleum
Oil Search
Santos
ALGO Sell Signal For Galaxy Resources
Our ALGO engine triggered a sell signal in Galaxy Resources into Friday’s ASX close at $3.57.
The “lower high” pattern is referenced to the January high near $4.50.
Lithium stocks, in general, have seen downward pressure recently after the release of a research paper which estimated Lithium production would double by 2025.
From a technical perspective, we see scope for GXY shares to retrace back to the $2.80 level.
Galaxy Resources
Will Gold Get A Lift From The FOMC?
The Price of Spot Gold slipped to a 3-week low of $1309.00 as the inverse correlation to the USD strength continues to influence price flows.
By the NY close, the yellow metal had found buyers into the weekend to settle at $1314.00.
With the FOMC expected to raise the FED Funds target on March 22nd, market commentators have noted that the price of Gold has rallied after the last 5 rates hikes in this cycle.
As illustrated in the chart below, Spot Gold traded at $1240 when the FOMC last raised rates on December 13th. By January 25th, Gold had rallied almost 10% to reach $1350.
Some of the local mining names we are following into the buy zone include NCM, EVN, SBM and SAR.
In addition, investors looking for a “pure play” on Spot Gold can buy the BetaShare Gold ETF with the symbol: QAU
Spot Gold
BetaShare Gold ETF: QAU
Property Stocks Find Buying Interest
As the US yield curve flattens, which is caused by the long-end of the curve no longer increasing at the same rate as the shorter-end, we’ve started to see institutional money flow back into ASX listed yield sensitive names.
Our preference among these, within the property sector is GPT, SGP, and WFD, (based on valuation grounds).
Within Utilities and Infrastructure, we continue to like AGL, SYD and TCL.
Buy Tabcorp – Price Reversal Approaching
We recommend buying Tabcorp as the price action retests the recent support level at $4.37.
Institutional money re-positioning ahead of the August earnings result will be the likely catalyst, which sees the share price trade back to the $5.25 level.
TAH goes ex-div $0.125 on the 11th of August.
TabCorp
Buy GPT – Price is now finding support
We recommend buying GPT and selling a covered call option into September.
GPT will pay a $0.123 dividend on the 29th of June.
GPT
Wesfarmer Plans To Spin off Coles
Shares of WES have opened over 5% higher to $43.60 as the company announced that it will divest its Coles grocery business into a stand-alone ASX listing.
This new entity will be made up of over 800 supermarkets and bottle shops, 700 gas stations and 88 hotels.
The action will result in WES shareholders being granted shares in the new Coles business after WES retains a 20% equity holding.
This is all pending board, shareholder and regulatory approval.
WES was added to our Top 20 Model Portfolio about 2 years ago at $39.05. We would consider WES a Buy/Write opportunity at current levels.
Wesfarmers
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453