CBA Nears Key Resistance

Posted on | by Todd | 1 Comment on CBA Nears Key Resistance

Australian banks are currently trading at lofty levels and close to significant chart resistance points.

We consider CBA to be most vulnerable to a down side correction considering the technical pattern and the premium at which it trades to its peers.

Going back to December 2015, there have been four occasions when CBA shares traded into the $85.00  to $86.00 price range before rolling over for a 5 to 10% correction. At this point, we are looking for a technical move back to the $80.00 level.

Fundamentally, huge consumer debt burdens, stagnant domestic wages growth and an overheated housing market will likely act as a headwind to further meaningful price appreciation.

Investors holding long CBA positions can look to sell covered calls into June, or buy the May $83.00 outright put option.

 

ASX Yield Sensitive Names Rally

Posted on | by Leon Hinde | Leave a Comment on ASX Yield Sensitive Names Rally

With bond yields moving lower in the US, we’ve seen strong buying interest in domestic yield sensitive names.

The rally is nearing the peak and taking profit  or selling tight covered calls is advised. History shows yields compressing below 4% will act as resistance for further share price advances.

Chart – TCL
Chart – SYD
Chart – WFD
Chart – SCG

 

JP Morgan Slips 1% After Q1 Earnings Report

Posted on | by Todd | Leave a Comment on JP Morgan Slips 1% After Q1 Earnings Report

Shares of JP Morgan fell over 1% today as their Q1 earnings report included a sharp increase in write-downs.

The company reported earnings of $1.65 per share, which was up from an adjusted $1.35 reported a year ago and higher than the street estimates of $1.52.

However, concerns emerged in the bank’s consumer group, where credit costs surged to $1.4 billion, up almost $400 million from Q4 2016. This expense was driven by higher credit card charge offs.

As the other major US banks report their earnings next week, we will watch for similar write downs as a source of selling pressure.

JPM shares closed at $84.40, which is over 11% lower than the $94.00 high posted on March 1st.

RIO Pressured Lower On Falls In Copper & Iron Ore

Posted on | by Todd | Leave a Comment on RIO Pressured Lower On Falls In Copper & Iron Ore

Shares of RIO Tinto have opened over 2% lower as both Iron Ore and Copper prices fell sharply in overnight trade.

Iron Ore prices seem to be in free fall, suffering an 8.5% drop to $68.00 per tonne. This is the largest overnight fall in over a year and extends the losses since February to over 28%.

Copper prices fell over 5% to $2.54 per pound in NY trade. This is a new 5-month low and technical indicators are pointing lower.

Rio shares are currently at $59.50. We see a key support area at $58.40, and would suggest a break of that level would extend materially to the downside.

Rio Tinto

ALGO Short Signal On Flight Centre

Posted on | by Todd | Leave a Comment on ALGO Short Signal On Flight Centre

The ALGO engine triggered a sell signal for Flight Centre (FLT)  yesterday at $30.95.

After posting a high of $31.20 on February 15th, FLT fell to $28.00 over the following two weeks. We see the possibility of a similar price pattern emerging.

The ALGO engine has done a good job of picking the ranges on FLT.

As such, we will wait until the short-term momentum indicators confirm the direction before taking action on the trade.

Flight Centre

Geopolitics Give Gold A Lift

Posted on | by Todd | Leave a Comment on Geopolitics Give Gold A Lift

Between increased hostilities in Syria, and a US Navy carrier group off the coast of Korea, geopolitical risk lifted Gold over $20.00 in overnight trade.

After trading down to $1195.00 on March 15th, the yellow metal has moved $80.00 higher and is now trading near $1275.00.

With momentum indicators approaching over bought levels, we see scope for a pullback to the $1265.00. However, over the next few weeks, a move back to the November 2nd high of $1310.00 looks like a reasonable target.

Over the last few weeks, we have been buying both shares and call options on Newcrest Mining and the GDX Gold Miners ETF.

Chart Newcrest

Suncorp – Holding Support

Posted on | by Leon Hinde | Leave a Comment on Suncorp – Holding Support

After a series of lower high structures over the past 2 years Suncorp looks to have found a short-term consolidation range with $12.75 support and $14 resistance.

We recently took profit in our long Suncorp exposure when the stock was last trading $13.75.  The stock is now back on our watch list but a break below $12.75 will show the downtrend remains the primary driver.

Chart – SUN