US Earnings Preview: JP Morgan, Citi and Wells Fargo

Posted on | by Todd | Leave a Comment on US Earnings Preview: JP Morgan, Citi and Wells Fargo

Before the US market opens later today, JP Morgan, Citigroup and Wells Fargo will report their Q2 results.

After last year’s post-election rally, these stocks and others in the financial sector have been trading in wide ranges.

However, over the last few weeks, bank stocks have rallied after the results of the FED’s “stress tests”, a push higher in short-term rates and hopes of further government de-regulation.

For Q2, JP Morgan is expected to report earnings of $1.57 per share, up 2 cents from last year on revenue of $24.8 billion. Wells Fargo is expected to report earnings of $1.02 per share, which is up 1 cent from last year on revenue of $22.3 billion. Citigroup is expected to report earnings of $1.21 per share, which is 3 cents below last year on lower revenue of $17.3 billion.

Our base case for the US banks is that trading revenues will be trending lower for the remainder of the year and the current levels look fully-valued with risk to the downside.

JP Morgan

Citigroup

Wells Fargo

 

Algo Signal – TWE

Posted on | by Leon Hinde | Leave a Comment on Algo Signal – TWE

Our Algo Engine flagged a recent buy signal in TWE at or near $12.30.

The recent share pullback creates an attractive entry point.  Asia demand looks strong and FY18 earnings should see underlying profit increase over 20% to $360 million.

We believe TWE is still in the early stages of building a significant business across Asia, which will help to support the “buy on the dip” approach.

Chart – TWE

Incitec Pivot: Look To Take Profits

Posted on | by Leon Hinde | Leave a Comment on Incitec Pivot: Look To Take Profits

On 11th of July we reminded readers of the blog that we viewed the recent Algo Engine signal on IPL,  as one our preferred buy-side signals.

IPL today has opened up 6.5% higher and is now up over 10% from the recent low.

Considering the recent volatility in fertiliser prices, we suggest taking profits in the current $3.55/60 price range.

Incitec Pivot

 

 

 

 

 

Algo Signal – Sonic Healthcare

Posted on | by Leon Hinde | Leave a Comment on Algo Signal – Sonic Healthcare

Our Algo Engine triggered a buy signal in Sonic Healthcare, following the recent sell-off from $24.60 back down to $22.30.

We continue to see Sonic delivering 6 – 8% EPS growth  and a 3.7% dividend yield. The stock is fair value at or near the current price and investors can consider SHL as a suitable buy-write for enhancing portfolio cash flow.

Chart – SHL

 

 

 

ETF Update: Stock Indexes Brace For FED Testimony

Posted on | by Todd | Leave a Comment on ETF Update: Stock Indexes Brace For FED Testimony

Over the last three trading sessions, volume for the Dow Jones 30 and the ASX 200 have both dropped by about 20% versus their 3-month rolling averages.

Some of the reduction in turnover is seasonal due to the Northern summer. However, many analysts are pointing to tonight’s Senate testimony from FED Chief Janet Yellen as a focal point which has kept traders on the sidelines.

At around midnight Sydney-time, Ms Yellen will address the Senate Banking Committee. She will update lawmakers on interest rate policy, the rate of balance sheet normalization and take questions.

The “cause and effect” logic is that if Ms Yellen’s comments reflect a more “hawkish” position from the FED on rate hikes and reducing the $4.5 trillion balance sheet, US equity markets will trade lower, which will likely spill over to the ASX.

Investors looking to profit from a lower XJO 200 or SP 500 can look to buy the BetaShare ETFs with the Symbol BBOZ or BBUS.

Both of these are inverse ETFs, which means that the unit price will increase as the indexes trade lower.

In addition, both of these ETFs are weighted, which means that a 1% change in the respective index translates to a 2.5% move in the ETF.

BBOZ is currently trading at $17.80, we calculate that the price would rise to $18.60 if the XJO 200 traded back to the June 8th low of 5620.

BetaShare ETF BBOZ

BetaShare ETF BBUS

Algo Buy Signals – AWC & BSL

Posted on | by Leon Hinde | Leave a Comment on Algo Buy Signals – AWC & BSL

Recent Algo Engine buy signals in BSL and AWC have performed well, with prices rallies of 20%+ in the past few months.

China has been ramping up production of both alumina and aluminium in the lead-up to potential capacity cuts. Alumina Ltd (AWC) is potentially the largest beneficiary, given it is a pure-play on the industry.

Rio Tinto and South32 also seem well-placed to benefit. We will reconsider these names on the next Algo Engine buy signal.

Chart – BSL
Chart – AWC

 

 

ALGO Update: CBA And MQG Look To Be Slipping Lower

Posted on | by Todd | Leave a Comment on ALGO Update: CBA And MQG Look To Be Slipping Lower

Our ALGO engine triggered a sell signal in CBA on June 29th at $84.10.

Since then the stock has traded as low as $81.80 and has a clear downward bias. In addition, the share price of MQG has also moved lower since late-June and internal indicators appear to be picking up momentum on the downside.

The Aussie banks, in general,  look to have a downward bias relative to the prices seen in late-May.

As such, we see the next technical support target for CBA at $78.50 and at $85.90 for MQG.

For more specific chart analysis of the local banking sector, send us an email or give us a call.

CBA

 

MQG