ALGO Update: Buy QANTAS On A Pullback

Posted on | by Todd | Leave a Comment on ALGO Update: Buy QANTAS On A Pullback

Shares of QAN have had a good start to 2018.

After slipping as low as $4.77 on January 10th, the share price has rallied over 10% and closed the week just off  its 1-month high near $5.25.

This move is made even more impressive against a backdrop of rising fuel costs and a stronger Aussie Dollar.

And while the internal momentum indictors aren’t reflecting an overbought condition, we believe that the share price is susceptible to pullback into the $5.00 support area in the near-term.

We added QAN to our ASX Top 50 Model Portfolio in July of 2017 at $5.25 and our ALGO engine triggered a buy signal in the stock on December 8th at the same price.

QANTAS

 

 

 

 

 

Crude Oil Rally Pauses on Trump’s USD Comments

Posted on | by Todd | Leave a Comment on Crude Oil Rally Pauses on Trump’s USD Comments

Since posting an intra-day low of $55.80 on December 6th, the price of West Texas Intermediate (WTI) crude oil has rallied almost 20% to hit a 3-year high of $66.60 in NY trade last night.

The sharp rise in WTI has had 2 primary tailwinds: a seasonal drawdown of crude oil in storage and a 4% drop in the USD Index.

However, this week’s events could diminish, or possibly reverse, those 2 market impulses.

According to the American Petroleum Institute (API), the amount of WTI in storage has dropped for 11 consecutive weeks. This week’s drawdown was 1.1 million barrels compared to an expected reduction of 2.3 million barrels.

In addition, the recent rise in WTI has seen the US rig count rise from 789 in early December to 939 this week. More production from rigs online will likely break the string of weekly drawdowns in the near-term.

With respect to the USD, Mr Trump told CNBC yesterday that the Greenback will strengthen over time and that recent remarks made by Treasury Secretary Steve Mnuchin about a weakening USD were misunderstood.

Our ALGO engine currently has a sell signal in OSH from the $7.60 area. A material correction in the WTI price could see the stock trade back to November support level near $7.00.

Oil Search

 

New Highs In MediBank Private

Posted on | by Todd | Leave a Comment on New Highs In MediBank Private

Shares of Medibank  Private have reached a new all-time high of $3.38 as the Federal Government approved a 3.95% increase in fees for calendar year 2018.

The news was a shot-in-arm for the private insurance provider whose shares have gained over 6.5% in the last 7 trading sessions.

Since our last ALGO buy signal in May at $2.73, the stock has picked up almost 24%. MPL shares are currently trading at 21X earnings on a 3.6% yield

Internal momentum indicators have now reached overbought territory and we suggest exiting long positions at, or near, the $3.30 level.

We will look for a pullback in MPL to reenter long positions and update accordingly.

MediBank Private

 

 

 

 

 

USD Sinks On Mnuchin Comments

Posted on | by Todd | Leave a Comment on USD Sinks On Mnuchin Comments

Over the last 4 years, the ability of G-10 Central bankers to drive financial markets has risen to historic levels.

A perfect illustration of this dynamic was yestrday’s sharp sell-off in the USD after comments from US Treasury Secretary Steven Mnuchin at the World Economic Forum in Davos.

The USD Index fell over 1% and posted a 3-year low after Mr Mnuchin said:

“A weaker dollar is good for us as it relates to trade and opportunities. Longer term, the strength of the dollar is a reflection of the strength of the US economy and that it is, and will continue to be, the primary reserve currency.”

It’s important to note that while the Yen, Sterling and EURO were all stronger against the USD, their domestic stock markets were all down over 1% on the day.

A policy meeting for the ECB is scheduled for later today. The EUR/USD has risen over 5% since the last ECB meeting in December.

It’s reasonable to expect ECB chief Mario Draghi to talk the EURO lower, which could mark a significant inflection point for the USD versus the other G-10 currencies, including the AUD.

The AUD/USD has gained more than 7% since mid-December. And while the RBA has not openly commented about the value of the AUD recently, they have been clear in their policy statements that a rising AUD is a “headwind” to domestic growth.

Investors who want to profit from  a lower AUD/USD can look to buy the BetaShare YANK ETF. YANK is an inverse ETF with a 2.5% weighting. This means that the share price of YANK will increase by 2.5% for every 1% fall in the AUD/USD.

With the YANK currently priced around $12.20, we estimate the share price to rise to $16.40 when the AUD/USD reaches .7150.

Call in for more information about YANK and the other ASX listed ETFs.

BetaShare ETF: Yank

 

 

 

 

 

 

ALGO Buy Signal: Cimic Group

Posted on | by Todd | Leave a Comment on ALGO Buy Signal: Cimic Group

Our ALGO engine triggered a buy signal for CIM at $48.20 into yesterday’s ASX close.

Shares of the infrastructure contractor have dropped over 8.5% since posting an all-time high of $52.70 on December 19th.

With several large developments planned for domestic capitol cities, we see good fundamental support down into the $47.50 area.

Technically, the internal momentum indicators show the most over-sold condition in the last 18 months.

In addition, we point out that the limited share registry in CIM adds value at extreme price levels.

We see initial price resistance at the January 18th high of $49.70.

Cimic Group

QBE Rebounds After Yesterday’s Warning

Posted on | by Todd | Leave a Comment on QBE Rebounds After Yesterday’s Warning

Despite warning investors about a potential US 1.2 billion full year after tax loss, shares of QBE are over 4% higher at $10.90.

After dropping over 6% to $9.85 yesterday, it seems investors looked past the headlines and saw value in the company going forward.

Much of this optimism was based on the one-off charge of US 230 million on the value of deferred tax credits in the USA and a US 700 million impairment charge.

Our ALGO engine triggered a sell signal in QBE  at $11.00 on October 24th.

With the daily chart still dominated by the “lower high” pattern from mid-August, we consider QBE a reasonable stock for a BUY/WRITE strategy.

QBE Insurance

 

 

 

 

 

The US Government Is Back Open………….Until February 8th

Posted on | by Todd | Leave a Comment on The US Government Is Back Open………….Until February 8th

The US Senate was able to agree on a short-term resolution to allow the Government to reopen until the 8th of February.

The US has not had a properly ratified budget since 2009 and these “stop-gap” agreements are now getting shorter in duration.

The DOW, S&P 500 and the NASDAQ all responded by making new all-time highs.

Interestingly, as illustrated in the charts below, not only are the 2-yr Treasury notes now yielding more than the SP 500 in the last 10 years, but the Index itself is the most overbought in history.

We suggest that the extreme valuations on Wall Street will soften US yields over the medium-term.

As such, we would expect to see buying interest in the ASX yield names such as TCL, SYD and WFD .

Our ALGO engine currently has flagged buy signals in TCL and SYD at $11.70 and $6.80, respectfully.

2-yr versus SP 500 yields

SP 500 Sentiment Oscillator

 

 

 

 

 

Regional Banks Continue To Slide Lower

Posted on | by Todd | Leave a Comment on Regional Banks Continue To Slide Lower

Since posting a intra-day high of $12.05 on January 10th, shares of BEN have dropped over 6% and have slipped to a 2-month low of $11.32 in early trade.

Similarly, shares of BOQ have lost 4.6% since the start of the year and posted a 5-month low of $12.26 last Friday.

Recent mortgage forecasts have illustrated that in an overall loan market which is contracting, the regional banks will face the strongest headwinds to achieving the margins and loan growth that they have created over the last three years.

Our ALGO engine triggered a sell signal for BEN on August 16th at $12.45, and for BOQ at $15.50 on August 7th.

This has been a popular “short” trade for investors on our SAXOGo platform.

We expect the next level of downside support at $11.00 for BEN and $12.05 for BOQ.

Bendigo Bank
 

Bank of Queensland

ALGO Update: Strong Start For Treasury Wines

Posted on | by Todd | Leave a Comment on ALGO Update: Strong Start For Treasury Wines

Shares of TWE have started the week 2.5% higher today and have traded back above the $16.00 level.

Our ALGO engine triggered a buy signal at $14.80 on January 11th.

Several wire firms included TWE on recent buy lists, citing the company’s solid sales and growth projections into 2018.

In addition,  we expect TWE will benefit from the  lower tax rate for their USA-based business.

Based on the daily charts, we expect the next area of resistance near the previous all-time highs of $16.55.


Treasury Wine Estates

XJO Update: Miners Lead The Index Lower

Posted on | by Todd | Leave a Comment on XJO Update: Miners Lead The Index Lower

The ASX XJO Index fell 1.1% for the week and traded below the 6000 level for the first time this year.

Mining stocks and the major banks led the downside following weakness in commodity prices.

The ASX Gold index dropped four sessions in a row and lost 1.3% on Friday to close at 4874.60.

Iron Ore prices posted their first weekly loss in over a month, which pressured shares of mining giants BHP and RIO Tinto lower for the week.

Shares of RIO fell 4.6% to $78.00 while  BHP slipped 3.7% to end the week at $30.70

Internal momentum indicators are looking fairly neutral on the daily charts, which suggest the index could see range trading next week between 6070 and 5985.

XJO Index