The Crude Oil Rally Is Looking Stretched

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Since December 1st, the price of WTI Crude Oil has rallied over 14%.

Just in the last 5 days the WTI price has risen 5% from $60.25 to a 3.5 year high today of $63.50.

Recent reductions in crude inventories combined with Geo-political tensions in the Middle-East have support prices.

However, there have been many analyst sceptical that this will be a protracted rally in Crude prices.

This scepticism can be seen in the price action of some of the local oil-based names.

Despite the 5% rise in WTI over the last week, shares of OSH have dropped by 2.5% to $7.90, and the share price of WPL and STO have been consolidating off their recent highs and look to be pointing lower.

We urge caution on the sustainability of the recent run up in Crude prices and would suggest exiting long exposure to WPL, STO and OSH

Woodside

Santos

Oil Search

 

TabCorp Is Approaching The Buy Zone

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Last week we mentioned that shares of TAH had reached overbought levels in the $5.75 area.

The share price has dropped 5 days straight and is now approaching the buy zone at $5.30.

We expect the synergy between TabCorp and Tatts to enrich the value of the company and believe TAH is a reasonable addition to investor portfolios for 2018.

TAH will go ex-dividend on February 7th for 12.5 cents per share. At $5.30 per share, this pencils out to a 4.7% yield.

TabCorp

 

ALGO Update: Buy And Hold QANTAS

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Our ALGO engine triggered a buy signal in QANTAS on December 8th at $5.25.

Since then the share price dipped to a low ow $4.84 on a combination of higher oil prices and a stronger AUD/USD.

With analysts forecasting QAN to post record earnings of 10.32% over the course of 2018, investors could expect shares of the flying kangaroo to reclaim some of last year’s upside trajectory.

Internal momentum indicators are pointing higher and the next key technical target is the mid-December high of $5.45.

QANTAS

 

 

Potential Triple Top In Woolies

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Our ALGO engine triggered a sell signal on WOW on November 2nd at $26.05.

Since then the share price has lifted over $1.00 as speculation continues surrounding the ACCC’s decision to reject BP’s offer to buy WOW’s 500 petrol station network.

A potential “triple top” formation is in play in the $27.70 range and we suggest exiting long positions for now.

CFD traders can look to sell WOW on our SAXOGo Platform in the $27.30 area with an initial target of $26.15 and a $28.10 stop.

Woolworths

 

 

 

The Technical Picture Is Improving For Telstra

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Shares of TLS have traded back into a significant technical price area.

Looking back to mid-August, the share price was beaten down from $4.33 to $3.50 just 10 trading sessions. This price action has left several gaps on the daily chart which are now being challenged.

TLS goes ex-dividend on March 1st and is on about a 6% yield at current prices.

It’s reasonable to believe that the current technical buying could lift the share price back over $4.00, which would still pencil out to over 5% yield, fully franked.

We still believe accumulating shares of TLS in this price range will benefit investor portfolios throughout 2018.

Telstra

 

Buy The Dip In Westfield Corp

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It’s been just under a month since the Westfield board recommended shareholders accept $32 billion takeover from French firm Unibail-Rodamco.

Since then, the share price has softened, has never traded at the cash and script offer of $10.01 per share, and closed at a post-announcement low of $9.18 on Friday.

Part of the recent weakness seems to be tied to the cash component of the deal valued at USD 2.67 per share.

The AUD/USD has risen from .7550 to .7850 since the deal was announced, which roughly corresponds to the 4.5% fall in the WFD share price since December 12th.

With the stock going ex-dividend on February 13th for 16.43 cents per share, we believe WFD is good value in this range for a move back into the $9.80/90 area in the near-term.

Westfield

 

Gold Rally Capped By FED Minutes

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Spot Gold prices reversed off a 4-month high of $1232 as the FOMC minutes suggested that the US FED is prepared to lift overnight rates up to 5 times in 2018.

The yellow metal has rallied over $80.00 over the last 3 weeks and has gained in 14 of the last 16 trading sessions. The internal momentum indicators are now in “overbought” territory which warns of a downside correction.

Much of the recent rally was supported by the notion that the FED would take a less aggressive monetary posture, which would weaken the US Dollar.

We maintain a bullish outlook for Gold but would look for a pullback to re-enter into long positions.

As such, we suggest taking profits in NCM in the $23.20 area and look to buy back at or near the $22.60 level.

Newcrest Mining

 

 

ALGO UPDATE: Buy The Dip In Treasury Wine Estates

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Shares of Treasury Wine Estates are down over 1% in early trade at $15.60.

This is almost $1.00 lower than their all-time high of $16.55 posted on December 20th.

TWE shares rose close to 50% in calendar year 2017 on increasing revenue and strategic acquisitions in Australia, Europe and the USA.

Our ALGO engine triggered a buy signal in TWE on July 11th at $12.45 and in our Top 50 model portfolio since September 2014.

We suggest adding to long TWE positions on this pullback to the $15.50 area for a move back above $16.50 over the medium-term.

Treasury Wine Estates

 

TabCorp Shares Are In The Sell Zone

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Shares of TabCorp have rallied past our initial profit target of $5.25 and now look technically “overbought”

After trading as high as $5.73 on December 27th, the share price has backed off to $5.50.

We still like the growth prospects for TAH for 2018, and beyond, but suggest taking profits on long positions and looking buy on a pull back into the $5.20 area.

  TabCorp

 

Shares Of CCL Firm In Front Of The February Dividend

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After posting a 9-year low at $7.50 on November 24th, shares of CCL have climbed over 12% and are currently at $8.52.

CCL traded as high as $10.85 last March and technically looks as though the share price has bottomed.

The $250 million share buyback scheme has lowered the NPAT to $190 million but return on capital has increased to 20% in H1 2017.

Aside from their carbonated products, CCL has a growing presence in the alcohol and coffee sector across Australia, New Zealand and Indonesia.

CCL will go ex-dividend on February 27th and pay 25 cents per share, fully franked. At the current share price, that equals a 5.4% yield.

The internal momentum indicators are rising and we see the next level of resistance at $8.95.

Coca-Cola Amatil