Iron Ore Gets Hammered

Posted on | by Todd | Leave a Comment on Iron Ore Gets Hammered

With the financial media focused primarily on the US missile strike in Syria, many investors didn’t notice the 7% drop in Iron Ore prices on Friday.

The spot price of Iron Ore fell $5.50 to $75.45 yesterday. This is over 20% lower than the February 21st closing price of $95.00.

Making matters worse, the September contract for Iron Ore on the Dalian exchange also closed 7% lower after trading down to its 8% limit for most of the session.

The sharp fall in Iron Ore will have its biggest impact on BHP, RIO and the Aussie Dollar.

The AUD/USD closed the New York session at a 1-month low of .7495. This is the first close below .7500 since early January and opens up the next support level at .7425.

Investors who would like to profit from a lower AUD/USD can look at the BetaShare YANK Exchange traded Fund. This is an inverse fun which gains value as the AUD/USD falls.

Call in for more details about YANK and the other ETFs that we cover.

Chart – YANK

US Payroll Preview

Posted on | by Todd | Leave a Comment on US Payroll Preview

The US Non-Farm Payroll data will be released at the start of today’s NY session. With US Stocks reacting negatively to the news of the FED’s plan to begin reducing their balance sheet, attention will be focused on the interest rate aspect of the report.

The consensus headline number is expected at 174,000 new jobs with Hourly Earnings expected to climb by .2%.

The cause and effect logic to the data will be that a stronger report would be negative for stocks, since it would support the odds of another rate hike in June.

Both the DOW 30 and SP 500 indexes are trading below their 30-day moving averages and could extend lower on stronger data. We see downside support at 20,300 and 2315, respectfully.

A large miss in the data would likely lift US stocks on the notion that the FED will remain on hold until August.

US Stocks Reverse Lower On FED Comments

Posted on | by Todd | Leave a Comment on US Stocks Reverse Lower On FED Comments

US stocks ended lower on the day after a sharp, mid-session reversal was triggered by comments from the US Federal Reserve.

It was reported that during the last FED meeting, when rates were lifted by 25 basis points, some voting members viewed US equity prices as “quite high relative to standard valuation measures” and that the central bank should take steps to begin trimming its $4.5 Trillion balance sheet.

The DOW 30 posted its largest intra-day downside reversal in 14 months. After an early gain of almost 200 points, the DOW closed down 41 points and near the session low.

Volume was very heavy at 7.5 billion shares compared to the average volume of 6.5 Billion shares over the last month.

It’s worth noting that the process of reducing the balance sheet acts as an accelerator to tightening monetary conditions and is generally not bullish in an over valued market.

FED Balance Sheet

Sell Oil Search Near Resistance

Posted on | by Todd | Leave a Comment on Sell Oil Search Near Resistance

After posting a four-month low at $47.10 on March 27th, WTI Crude Oil has rallied to close at $51.10 today.

Shares of Oil Search have followed crude higher moving from $6.90 to a three-month high of $7.34 in early trade.

We see scope for a move back to the $7.70 level over the near-term. This would represent a “double top” technical pattern which usually serves as price resistance.

In this case, a move up to $7.70 would give investors a chance to take profits on long positions or write covered calls to enhance portfolio returns.

We recognize that the energy sector has some level of upside momentum, for now, and stocks like BHP and Origin on our buy side radar.

Chart Oil Search

RIO and BHP Are Close To Support

Posted on | by Todd | Leave a Comment on RIO and BHP Are Close To Support

The share prices of  RIO and BHP are both approaching key support levels which could create investment opportunities.

The are both trading below their 30-day moving averages but are close to support $58.80 and $23.50, respectfully.

The attached charts show that these support line have held and became good buying levels for a move higher over the last six months.

However, we are mindful of the importance of exports to China for both of these companies. Overnight, China’s five largest banks reported earnings which showed steady results but increases in the  percentage of non-performing loans tied to real estate.

It’s worth noting that Chins’a top five banks are considered the largest in the world in terms of assets. A sharp contraction in any of those five could trigger weakness in RIO and BHP

Chart – BHP
Chart – RIO

 

ASX – Stocks to Watch

Posted on | by Leon Hinde | Leave a Comment on ASX – Stocks to Watch

A number of stocks within the ASX top 50 appear to be setting up medium term short signals.

We’re mindful of the upward bias in equity indexes, however, much of this is driven by broad inflows into index funds and valuations are becoming stretched, even if Q1 earnings in the US hit their target.

Here is a list of the names that are worth taking a closer look at….

AMP, LLC, SGP, CPU, JHX,  & AGL.

Chart – AMP
Chart – CPU