ETF UPDATE: Aussie Dollar Hits 4-Month Low

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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

Buy The Dip In Spot Gold

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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

 

CSR Reverses Lower After H1 Results

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CSR lifted their H1 profit by 3.7% as the building products supplier benefited from the firm residential housing market.

However, the market was expecting a better result as CSR shares are down over 5% at $4.48 in early trade.

Our ALGO engine has triggered three sell signals in CSR in the $4.80 to $4.95 range over the last two weeks.

With the internal momentum indicators in “overbought” territory on the daily charts, we now see scope for a move back to the low $4.00 handle.

CSR

 

ALGO Udate: Bendigo Battered After AGM

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Shares in BEN dropped close to 5% yesterday after CEO Mike Hirst told investors at the AGM that APRA’s lending limits had dampened growth momentum and made it harder to compete.

He also said that APRA’s caps on interest-only lending had forced the bank to “slam on the brakes” on these types of loans. Further, he expects total balance sheet growth to be relatively flat during 2018.

Our ALGO engine triggered a sell signal on BEN on August 16th at $12.50. This level has never been challenged during the recent correction higher and we now look at the June 23rd low of $10.50 as the next key support level.

It’s worth noting that yesterday’s sharp drop in the share price was on very heavy volume of 4.2 million shares. The average daily volume over the last three months in BEN has been in the 1.4 million share range.

Bendigo

 

ALGO Update: Technical Outlook Improves For Crown Resorts

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Our ALGO engine triggered a buy signal on Crown Resorts on September 28th at $11.10.

Since then the share price has traded in a range between $11.80 and $10.90.

We are seeing an improved technical picture on the stock with buy-side support increasing in the $11.10/20 range.

Over the medium-term, we see the $11.80 level broken to the upside with a potential range extension up to $12.60.

Crown Resorts

 

Newcrest Gets A Lift From The Weaker Aussie.

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Last week’s production report from Newcrest showed a drop of 5.2% versus the previous quarter. However, the company reaffirmed their full-year production forecast of between 2.4 and 2.65 million ounces of Gold for the year. 

Despite the lower quarterly production, and sideways trade in Spot Gold, shares of NCM have gained about 4% from $21.50 to $22.30 over the last six trading sessions. 

One of the reasons for this is last week’s 2% slide in the AUD/USD.

NCM sells its Gold on the international market which is priced in US Dollars. As the AUD/USD trades lower, the profit margin on a fixed ounce of Gold increases. 

The technical picture has also improved on the stock and we see price resistance near the mid-September level at $23.20. A rally back over $1300 in Spot Gold would likely extend the price range to $23.70.

Newcrest Mining

 AUD/ USD

 

 

 

 

Crude Oil Firms After OPEC Comments

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The price of WTI Crude Oil rose over 2% on Friday as comments from several OPEC ministers reaffirmed their commitment to rein in excess output from OPEC and non-OPEC producers.

The front-month November contract posted a 6-month high at 54.20 as the apparent adherence to the production cuts creates a solid pretext for the November 30th OPEC meeting in Vienna.

OPEC and other major producers including Russia have pledged to reduce production by around 1.8 million barrels per day to drain a global supply glut.

The next key resistance level is the February 23rd high of $54.90.

WTI Crude Oil

ALGO Update: Sell Ramsay Healthcare

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Our ALGO engine triggered a sell signal on RHC at the ASX close yesterday at $67.20.

On August 22nd, RHC posted an intraday high of $76.20 before falling close to 20% to $61.05 on September 21st.

While the price rebound over the last few weeks has given investors the chance to make some short-term profits, the medium-term outlook suggests more range-bound price action going forward.

RHC is currently trading at 23X FY18 earnings and a yield of 2.3%.

Ramsay Health Care

Amazon Surges After Q3 Earnings Report

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Shares of Amazon rose 12% in overnight trade and reached an all-time high of $1,105.58.

The E-commerce giant reported earnings per share of 52 cents compared to the street’s estimate of 3 cents per share.

The company pointed to the 42% year-on-year increase in its web services and a boost in sales from Whole Foods as key drivers for growth in the quarter.

Interestingly, with the share price over $1,100.00, the “Price to Earnings” ratio is now 246.25 to 1.

Amazon

MQG Sprints Higher On H1 Results

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Shares of Macquarie Group posted an all-time high at $98.28 in early trade on a solid half-yearly result and the announcement of a $1 billion share buyback scheme.

The bank’s net profit for the six months to September 30th was up 19% at $1.25 billion, while net operating income was up 3.4% to $5.4 billion.

A key driver of the report was a 17% rise in fees and commission income from their US debt capital markets business.

It’s expected that the bank’s full-year results will be inline with last year’s $2.2 billion result, which means second-half could be slightly lower.

The interim dividend was lifted by 15 cents to $2.05 per share, 45% franked.

From a technical perspective, the sharply higher open has left a $2.00 gap from yesterday’s high of $94.39 to today’s low at $96.53. Typically, price gaps are filled but we don’t expect that to happen during today’s session.

Macquarie Group