Woodside Petroleum has now sold off $2.00 since making a high of $33.37 on the 7th of November.
After having a recent profitable trade in WPL, we again look to the buy side on further price retracement and view $30 – $30.75 as a low risk entry level.
Shell has announced the sale of 71 million shares or 8.5% of WPL’s register. Shell’s ownership will be reduced to 4.8%. The consideration will be approximately A$2.2billion.
Woodside
The AUD/USD has broken down to a 4-month low as local political turmoil combined with general US Dollar strength has the Aussie close to breaking the .7600 support area.
Softer import data from China and dovish comments from the RBA have also triggered investors to exit long AUD positions.
Internal momentum indicators are pointing lower with the next key support level in the .7540 area.
Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.
YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate by 2.5% for every 1% change in the AUD/USD exchange rate.
With a current price of $13.85, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January low of .7160.
Aussie Dollar
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Spot Gold dropped over $10.00 on Friday after a 200,000 ounce sell order hit the market into the London close.
These types of large block trades (on both the buy and sell side) have become more frequent over the last few months as investors assess the impact of interest rate policies, currency movements and geopolitical risks.
However, with reported Q3 central bank Gold purchases of over 100 tons, we expect the $1270.00 support level to hold before the yellow metal makes another run at the $1300.00 area.
Our preferred names in the Gold area are NCM, EVN and NST.
NCM is currently trading at 30X trailing earnings and EVN and NST are at around 18X earnings.
As such, the correlation between the between the Spot price and these share prices will remain very positive.
Spot Gold
AMP was recently added to our ASX top 20 and top 50 model portfolio. The stock has traded higher and we now look to sell covered call options to enhance the return.
AMP trades on a 5.4% yield and will pay $0.14 in February 2018.
We continue to hold Woolworths in our client portfolios as an income holding. With 3 – 5% EPS growth and 3.7% dividend yield, WOW is likely to trade within a price range of $25 – $27.
Selling $27.00 June 18 call options and collecting the March dividend delivers an annualised cash flow of 10%+
The S&P/ASX 200 Index finished the week up 1.17%.
The best performer was the Property Trusts sector, up 4.3% & the worst performer was the Telecoms sector, down 0.6%.
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