ETF Watch: Buy BBUS

Posted on | by Todd | Leave a Comment on ETF Watch: Buy BBUS

Against a backdrop of rising interest rates, weaker economic data and political gridlock, the SP 500 is still trading within 1% of its all-time high price of 2451.

The US Federal Reserve has lifted the Fed Funds target three times since the SP 500 posted its pre-election low of 2025 on November 9th of last year.

The tightening of credit conditions combined with lower corporate loan growth has been a trigger for material corrections in US equity markets in the recent past.

Investors looking to profit from a fall in the SP 500 can look to buy the BetaShare ETF with the symbol: BBUS.

BBUS is an inverse ETF, which means the unit price will rise as the SP 500 Index trades lower.

BBUS is also weighted, so that a 1% move in the SP 500 Index translates to a 2.5% change in the unit price.

The unit price of BBUS is currently near the $7.00 level. We calculate that when the SP 500 trades back to the November low of 2025, the unit price of BBUS will be in the $10.75/ $11.00 area.

 

BetaShare ETF: BBUS

 

ALGO Buy Signal For Woolworth’s

Posted on | by Todd | Leave a Comment on ALGO Buy Signal For Woolworth’s

The ALGO engine triggered a buy signal on WOW at yesterday’s close at $25.10.

This is purely a technical signal.  However, with the dividend yield close to 3.8% with the price at $25.00, it looks like a reasonable defensive stock in an uncertain market.

We’re looking for a price recovery to the $27.00 area to take profits or write covered calls to enhance portfolio returns.

Woolworth’s

 

Caltex Is Nearing The “BuyZone”

Posted on | by Todd | Leave a Comment on Caltex Is Nearing The “BuyZone”

The price of WTI Crude Oil hit a 7-month low of $42.75 in New York trade last night. As a result, shares of CTX have opened 1.5% lower near $31.20.

Last week we suggested that clients take profits in CTX long positions in the $34.00/25 area.

We will look to re-enter long positions for a reversion move higher back into the $34.00 area over the medium-term.

Caltex

 

Algo Sell Signal – General Electric

Posted on | by Leon Hinde | Leave a Comment on Algo Sell Signal – General Electric

Our Algo Engine generated a “short” or sell signal in General Electric back in mid December, when the stock was trading $32. In last nights sell-off in the US, GE was the worst performing stock within the Dow Jones index.

The overnight selling is a continuation of the downtrend that has been in place since the December high.

Chart – GE

 

 

Tabcorp & Tatts Merger Approved

Posted on | by Leon Hinde | Leave a Comment on Tabcorp & Tatts Merger Approved

The Australian Competition Tribunal has approved the proposed merger of TAH and Tatts Group (TTS),  on the basis that they are satisfied that the merger will result in substantial public benefits and on the condition that TAH divests its Odyssey gaming business.

We see scope for upside in TAH share price as a result of synergy cost savings and the prospect of a large scale share buy back program in 2018.

Chart – Tabcorp

 

Bad News For Aussie Banks

Posted on | by Todd | Leave a Comment on Bad News For Aussie Banks

Australian banking names received a double-dose of bad news last night as the Parliament passed the $6.2 billion banking levy and Moody’s downgraded their long-term credit ratings citing risks associated with the local housing market.

Shares in all the major banks have opened lower today with Westpac half-a-percent lower. The banking stocks have posted a rebound over the last few sessions but now look poised to re-test the lower price levels seen in early June.

Our ongoing concern about the banking sector’s current valuations have been: limited growth in the loan generation area, as well as, deteriorating quality of their overall loan exposures.

The banking levy, which commences July 1st, and the prospects of higher funding costs due to the credit downgrade won’t improve the banking sector’s profitability over the longer-term.

ANZ

CBA

MQG

NAB

WBC

Weaker Housing Data Could Drag On US GDP

Posted on | by Todd | Leave a Comment on Weaker Housing Data Could Drag On US GDP

Prior to the market open on Friday, the US Commerce Department announced that Housing Starts fell fort a third straight month in May and has reached the lowest level of new home construction in eight months.

This development, along with a drop in Consumer Sentiment and Building permits, suggest that general construction has declined broadly during 2017 and could be a headwind to economic growth over the second quarter of the year.

This slowdown may have earnings implications  for the US divisions of Boral and James Hardie.