Chart Watch – XJO Index
The XJO chart below shows the index breaking-down after finding selling pressure at the recent lower high formation on the 2nd of June.
Bendigo Battered Again
Bendigo and Adelaide Bank (BEN) shares are down a further 2.7 % after losing a whopping 4.4 % yesterday.
In addition to general weakness in the banking sector, shares of BEN are feeling the fallout from alleged accounting discrepancies from their reverse mortgage division, Home Safe.
From a technical perspective, the next significant level of support will be found around the August 8th lows of $9.75.
We would urge caution to investors considering buying BEN above the $10.00 handle.
Bendigo and Adelaide Bank
Take Profits On TWE
Back on February 15th, TWE announced that their first half net profit doubled to $136 million. Since then, the share price has traded from $11.20 to an all-time high of $13.63 yesterday.
We suggest taking profits in this price area or writing at-the-money covered calls to enhance the portfolio returns.
There’s no question that TWE has been a well-managed, success story in the beverage space and we’ll follow the ALGO engine to buy back in at lower levels.
Treasury Wine Estates
Gold Climbs To An 8-Week High…….NCM Up 1.5%
On May 6th, we posted a report on Gold which suggested the yellow metal was holding support levels at $1220.00 and had a medium-term target of $1260.00. At this time, NCM was trading at $20.10
Gold traded as high as $1281 in early Asian trade today and NCM is finally joining the rally. The stock has reached a two-week high of $21.78 and internal momentum indicators are looking constructive for a move higher.
We’re still expecting higher prices in both, with the next resistance level for gold at $1293.00, and the May 18th high of $22.20 for NCM.
Newcrest Mining
June Quarter US Market Update – Video
The Dow Jones index continues to hold the higher low technical formation.
We review which stocks within the Dow Jones top 30 index are presenting relative strength, supported by our Algo Buy signals.
US Stocks Trade Higher On Weak Jobs Report
The US unemployment rate unexpectedly fell to 4.3%, a new multi-year low, but it is a misleading statistic for what was a very disappointing overall report.
Besides the decline in the unemployment rate, and a further decline in the under-employment rate (U-6) from 8.6% to 8.4%, there is little positive in today’s report.
Non-farm payroll growth fell to 138k, nearly 50k below expectations, which had been bolstered by the weekly jobs claims and the ISM jobs component. Adding insult to injury, the back to months saw jobs growth revised 66k lower than first reported.
Moreover, the drop in the unemployment rate can largely be explained by the decline in the participation rate from 62.9% to 62.7%. This unwinds this year’s improvement in the participation rate, and bring it back to where it finished last year.
The major stock indexes finished higher on the day, on thin volume, as the odds of a third rate hike for 2017 have been reduced
Algo Buy Signals – Take Profit
It’s time to take profit or sell tight covered calls in the following names:
Resmed, Treasury Wines, Transurban, Sydney Airports, Caltex, Ansel, Sonic Healthcare, CIMIC Group, Amcor, Brambels & Medibank.
Buy The Pullback In Origin
Origin Energy has been trading in a broad range between $6.70 and $8.10 over the last four months.
We recently took profits for client portfolios at $8.00 and are currently looking for a retracement into the $7.50 area to re-enter long positions.
The recent weakness in crude oil has had a dampening effect on various energy names. However, we feel Origin’s natural gas assets will keep the share price fairly well bid over the medium to longer-term.
Origin
Iron Ore Slips Below $60.00
Spot prices of Iron Ore fell again overnight dropping to a fresh seven-month low. The 62% grade was down over 2.5% to close at $57.02 per ton.
During the month of May, Iron Ore dropped over 17%, extending its decline from the multi-year high of $95.00 last traded in February.
Mining names BHP, RIO and FMG are all under pressure in early trade losing more than 1% each.
FMG has reached an eight-month low of $4.70. We see the next downside targets on Rio and BHP at $59.50 and $22.50, respectfully.
Rio Tinto
BHP
Fortescue Metals
US Financials – Goldman Sachs
Regular readers of the blog will recall the Goldman Sachs post we made on the 19th May 2017, (the post referenced the downward channel GS was tracking).
In the last few trading sessions, the stock rallied to the resistance within the channel and has now moved sharply lower in overnight trade.
Goldman Sachs was down 3.3% and was the worst performing Dow Jones stock in the overnight session. As the US reflation trade loses momentum, the bounce in the US financials has met renewed selling pressure at “lower high” levels.
The chart below shows Goldman Sachs’ sharp reversal.
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