The horizontal channel on the WPL chart below indicates our target price range where we believe new buying interest will begin to build.
The mid-point is approximately $32.00
STO & OSH should also be considered.
Woodside Petroleum
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Our ALGO engine triggered a sell signal for QANTAS into yesterday’s ASX close at $5.90.
This “lower high”pattern is reference to the intraday high of $6.30 from September 12th.
On October 25th, we posted a report to buy QAN in the $5.40 area on the basis of lower oil costs and steady earnings growth.
At this point, it looks like oil prices are overdue for a rebound higher, which could pressure QAN back into our $5.40 to $5.35 buy zone.
As such, we suggest taking profits in QAN. At current levels the return will be just over 8%.
We will look for another ALGO buy signal in the $5.30 area.
QANTAS
The XJO has formed a “lower high” pattern within the existing Algo Engine buy signal structure.
The market has rallied 6% from the recent buy signal but we’re now mindful of the recent break of the “higher low” structure, as circled on the chart below.
5941 is resistance for the XJO and whilst the market remains below this level, some caution is required.
Names that remain supported within today’s broad market sell off include, AGL, CTX, GPT, WES, SCG, TCL, HSO & WOW. We remain cautious on the banks and select resource names .
XJO
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Last month Healthscope’s shares jumped as much as 22% to $2.17 on the news BGH Capital-AustralianSuper consortium will offer $2.36 cash per share as an indicative takeover price.
Since then, HSO shares have settled back at $2.05 – $2.10 and we feel value is now on offer and investors should look to accumulate the stock.
Healthscope runs 43 private hospitals across Australia and 24 pathology laboratories in New Zealand.
In May, Healthscope refused to open its books to a prior takeover offer, instead, saying they’ll look into the sale and lease back of its hospital assets.
Pressure is now mounting on the HSO board of Directors to engage and allow the acquiring entity access to the data rooms and due-diligence process.
NOTE: This morning a competing bid has been announced, Brookfield Capital has now Offered $245.5 per share.
Healthscope
Lendlease’s engineering and services division announced a further $350 million write down last week, which brings the NorthConnex tunnel project write-offs to more than $700 million.
An extraordinarily large number on a project that offers a total revenue of $2 billion. As a result of this, the board of Directors are currently considering if the division is “core” to the Leanlease operation.
Currently the division, contributes less than 15% to LLC’s overall earnings.
The markets reaction has been brutal and with the stock down over 20% in the last two days.
At under $14.00, we consider this a unique long-term opportunity to accumulate LLC at a discounted valuation.
Lend Lease
TWE, SEK and CAR are all displaying current Algo Engine buy signals and are therefore a holdings within our ASX100 model portfolio.
We recommend accumulating TWE stock within the $14.50 – $15.50 price range.
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Seek is another name where above average EPS growth is likely to be achieved in FY19 & FY20. We recommend accumulating the stock within the $17 – $18 price range.
CAR delivered a disappointing earnings update earlier this month, however, with the stock price correcting 25%, we now see value emerging.
After sinking to 5624 on October 26th, the XJO index has rebounded over 5% to reach a 3-week high of 5933 on Friday.
As illustrated on the chart below, this retracement looks to have found resistance near the 30-day moving average at 5920.
We consider this technical level an important inflection point in determining the near-term direction of the index.
The next key resistance level will be 5965. However, a break of the 5815 level will suggest a retest of the previous low.
XJO Index
Daily price volatility in Gold has reached a 7-month high as investors weigh the impact of equity market uncertainty to higher interest rates in the USA.
Since trading as low as $1160.00 in mid-August, the yellow metal rallied close to 10% to post an intraday high of $1243.00 on October 26th.
From a technical perspective, we consider the wider intraday trading ranges as an opportunity for investors to profit from the increased activity in the local mining shares.
Both EVN and NST are currently in our ASX Top 100 model portfolio.
We will update specific entry levels in those names as Gold finds traction above support at $1190.00
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