Our ALGO engine triggered a buy signal for OSH into the ASX close yesterday at $7.05.
OSH is widely regarded as owning some of the southern hemisphere’s best LNG assets and as such is a favorite stock for retail investors.
The stock’s performance has closely tracked the global energy markets, which have been very active recently.
Technically, we see scope for a upside move to $7.80 and good support near the $6.90 area.
Oil Search
Our ALGO engine triggered a sell signal in BEN at $12.40 last August.
The initial downside target was in the $10.90, which has been met.
Internal momentum indicators are still pointing lower and the next level of support will be found near the June lows around $10.30.
Bendigo Bank
Hearings in the long awaited banking Royal Commission start today with the examination of evidence and some questioning of witnesses.
The main focus for will be in the mortgage segment of the banking business, which includes over $1.7 Trillion in residential mortgages.
We believe one of the pricing risks to the banking shares revolves around the alleged $500 billion in “liar loans”: or loans which have been made using false information.
What’s worse is that over $92 billion of these loans are alleged to have been generated by bank officials falsifying information.
We believe the impact of the Royal commission has already been priced in to a degree. However, we still see the price risk going forward skewed to the downside.
The chart below of the BetaShare ASX Financial ETF illustrates the current neutral reading in the local shares.
BetaShare QFN ETF
Since posting a two-year high of $37.00 on February 27th, shares of CTX have dropped close to 12% to reach $32.60 in early trade today.
Much of this down move has been in response to its full year results, which saw operating profits only marginally rise above their guidance.
We sold the May $36.00 calls for shareholders on February 28th for $1.00.
Those calls are worth about 35 cents today and investors will get paid the 61 cent dividend.
We don’t currently have a buy signal for CTX. However, based on the recent price action above the key support area of $31.50, we expect to see one soon.
CalTex
Shares of NCM have dropped over 5% in early trade reaching an 8-month low of $20.30.
The selling pressure is in response to the weekend news that the Cadia mine west of Sydney has been closed due to a failure of an embankment at a tailings storage area.
Initial investigations suggest the break in the wall is related to 2 local tremors, of 2.7 magnitude, which struck the region on Friday.
NCM officials have released a statement today saying that no tailings will reach the local environment, but that 2018 production guidance could be impacted.
Based on the information disclosed so far, we don’t expect a protracted production halt at Cadia like after the seismic event in April of last year.
As such, we believe that increased production efficiency at the Lahir mines in PNG combined with an upward trajectory in Spot Gold prices will see NCM shares stabilize above the $20.00 support level.
NCM is part of our ASX Top 50 model portfolio and we believe adding to long positions in the $20.40 area is a reasonable strategy.
Newcrest Mining
Our ALGO engine triggered a buy signal for BHP into the ASX close at $28.35.
The “higher low” price structure is referenced to the $26.90 low posted on December 8th.
BHP’s share price has dropped 10% over the last 8 trading sessions as concerns about the company’s proposed sale of shale assets has somewhat clouded their future earnings outlook.
During a webcast on Friday, CFO Peter Beaven reminded investors that BHP has a policy of paying out at least 50% of profits in dividends and increased that to 72% in the December half.
With respect to the shale assets, one analyst report suggested that for every $1 billion of proceeds from the sale, BHP can return 24 cents per share.
Technically, we see good price support at the $27.85 level and an area of initial resistance at $30.15.
BHP
Despite the 3% drop in Iron Ore prices overnight, shares of FMG have firmed to $4.83 in early trade.
Comments from commodity traders suggest that the recent dip in Iron Ore prices may be more of a seasonal cycle than a fundamental shift to lower demand.
The technical outlook has improved this week as the price action remains above the $4.60 consolidation area from mid-December, and internal momentum indicators are pointing higher.
FMG is part of our Top 50 Model portfolio and we suggest that investors can buy the stock at current levels for a move back into the $5.40 area over the medium-term.
Fortescue Metals
Shares of SUN are down 1% in early trade at $13.76.
A research note from a local investment bank has lowered the guidance on SUN to “under-perform” and adjusted their price target to $12.45.
The report cites higher operating costs and lower margins to rationalize the lower price.
Our ALGO engine triggered a sell signal in SUN at $14.05 on November 10th; we agree with the downside target of $12.45.
SunCorp
Since posting an all-time high of $18.09 on February 22nd, shares of TWE have slipped over 6% lower and touched the $16.84 level yesterday.
We consider TWE one of the best growth stocks on the ASX, but with a P/E of over 35X we prefer to buy it at lower levels.
From a technical perspective, we see good support in the $16.35/40 area and will advise on entry levels in subsequent postings.
Treasury Wine Estates
As global markets become more concerned about the impact of US tariffs and the escalation of trade disputes, the price of Spot Gold has firmed back to the $1340 level in late NY trade.
Our preferred local gold stock to buy is Newcrest, which has recovered smartly from the $21.20 low last week to reach $22.20 in early trade today.
The correlation between Spot Gold and NCM has been around 70% over the last 6-months.
As such, we would expect a break of the $1350 level in the spot price to correspond to just under $23.00 for NCM.
Newcrest was added to our Top 50 Model portfolio on December 13th at $22.10.
Newcrest Mining
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