ALGO Buy Signal For Sydney Airport

Posted on | by Todd

Our ALGO engine triggered a buy signal for Sydney Airport into yesterday’s ASX close at $7.05.

The “higher low” chart formation is referenced to the $6.90 intra-day low posted on May 17th.

SYD has now been added to our ASX Top 50 Model portfolio.

As a medium-term strategy for investors, we are looking to buy SYD shares at current levels and sell the $7.25 Calls into March.

The option is current priced at 30 cents and SYD will go ex-dividend for 18 cents in late December. As such, this Buy/Write strategy would add 48 cents of value into client portfolios.

Sydney Airport

 

ALGO Sell Signal On GPT……3 Yield Names Go Ex-Div On Thursday

Posted on | by Todd

Our ALGO engine triggered a sell signal on GPT on June 21st at $5.36.

This “lower high” pattern is referenced to the high of $5.49 posted earlier this year on January 5th.

It’s worth noting that two other yield sensitive names, TCL and SYD also triggered ALGO sell signals last week. Furthermore, all three of these stocks will go ex-dividend on Thursday, June 28th.

As illustrated in the charts below, all three of these stocks have been in an uptrend since March.  We expect this pull back into their dividend should allow for better entry points for medium-term investors.

We see initial support for GPT at $4.70, with a stronger chart point at $4.50.

GPT

Transurban

Sydney Airport

Enhance Cash Flow On TCL And SYD

Posted on | by Todd

Our ALGO engine triggered a sell signal on both SYD and TCL into yesterday’s ASX close at $7.47 and $12.20, respectfully.

We suggest either taking profits on the stock or using the option strategy  outlined below.

With both of these names going ex-dividend on June 28th, we suggest selling a call option above the market to increase cash flow and enhance the return.

For TCL, we are looking to sell the October $12.50 call for around 24 cents and collect the 28 cent dividend.

For SYD, we will sell the October $7.75 call for around 12 cents, which will keep investors in the stock to collect the 18.5 cent dividend.

Transurban

Sydney Airport

ALGO Sell Signal For Sydney Airports

Posted on | by Todd | Leave a Comment on ALGO Sell Signal For Sydney Airports

Our ALGO engine triggered a sell signal on SYD into yesterday’s ASX close at $7.37.

This “lower high” pattern is referenced to the intra-day high of $7.50 on December 19th.

The company expects to meet distribution guidance of 37.5 cents per share, which is up from 34.5 cents last year.

At $7.40, SYD shares are trading on a forward P/E of 44 X and are paying an annual dividend yield of 5%, which is un-franked. 

As such, we see a pull back in the shares price as corrective within a broader uptrend, and expect a buy signal around the $6.80 level.

Sydney Airports

 

 

 

 

 

Sydney Airports – generating 10%+ cash flow

Posted on | by Leon Hinde | Leave a Comment on Sydney Airports – generating 10%+ cash flow

Sydney Airports reported March quarter traffic growth of 6%, with International up 11% and domestic up 3.5%.

Total passenger volume was up 4% on the same time last year.

We’re comfortable buying SYD and selling a $7.00 call option to enhance the yield.

A combination of the dividend and the option premium is generating 10%+ cash flow on an annualised basis.

SYD goes ex-div on the 29th June for 16.5 cents per share.

 

 

US Yield Curve Continues To Flatten

Posted on | by Todd | Leave a Comment on US Yield Curve Continues To Flatten

Even though the US Stock market has stabilized over the last week, the US Treasury curve continues to flatten.

As illustrated in the chart below, the difference  between the US two and 10-yr bonds has now dropped to 46 basis points (2.36% vs 2.82%).

This is the first time since 2007 that this spread has narrowed below 50 basis points, and, in the past, has been a level which has foreshadowed recessionary pressure.

It’s our base case that the bulk of the curve flattening has been a result the two-yr yields rising quickly and the longer dated yields trading sideways to lower.

In this respect, we would expect some of the local yield names to find some buying support this week.

Some of the stocks we prefer include; TCL, SYD, WFD, AMC and GPT.

For more information about how to trade the US yield curve, call our offices on 1-300-614 002

2-yr versus 10-yr yield spread

Transurban

Sydney Airport

Westfields

 

 

 

Stress Is Building In the Inter-bank Lending Market

Posted on | by Todd | Leave a Comment on Stress Is Building In the Inter-bank Lending Market

While much of the financial media has been pointing to the threat of a trade war as the source of recent market volatility, we have also noticed rising stress in the inter-bank funding market.

As illustrated in the chart below, the LIBOR-OIS spread has spiked from 22 basis points to almost 60 basis points over the last 5 weeks.

The LIBOR-OIS spread reflects the amount of premium one bank requires from another bank to loan them money.

In simple terms, when banks start to question the financial health of other banks, the spread widens.

Rising funding costs are a headwind to global equity markets, which in turn acts to dampen bond yields; especially in the longer end of the curve.

The practical impact of this dynamic has been seen in the recent firming in some of the local interest sensitive names.

At these levels, we prefer the long side of SYD, TCL, SCG and WFD

LIBOR-OIS Spread

Sydney Airport

Transurban

Scentre Group

Westfields

Property Stocks Find Buying Interest

Posted on | by Leon Hinde | Leave a Comment on Property Stocks Find Buying Interest

As the US yield curve flattens, which is caused by the long-end of the curve no longer increasing at the same rate as the shorter-end, we’ve started to see institutional money flow back into ASX listed yield sensitive names.

Our preference among these, within the property sector is GPT, SGP, and WFD, (based on valuation grounds).

Within Utilities and Infrastructure, we continue to like AGL, SYD and TCL.

 

 

U.S. Retail Sales Weighing On Rates

Posted on | by Leon Hinde | Leave a Comment on U.S. Retail Sales Weighing On Rates

U.S. Retail Sales fell for a third straight month in February as households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter.

Consumer spending, which accounts for more than two-thirds of U.S. GDP, appears to have slowed at the start of the year.

The combination of weak consumer spending data and global manufacturing data has been enough to see yields run into resistance.

The peak optimism on synchronized global growth and inflation pick-up, now appears to have passed.

With yields moving lower, we’re likely to see a better environment for the yield sensitive sectors. Telecommunications, Utilities, Consumer Staples and Real-Estate.

Some of the local names in these sectors include: SYD, TCL, AGL, GPT, SCG and WFD.

The chart below illustrates the yield on the 30-yr bonds falling relative to the shorter dated 2-yr bonds. This is typical during a period of slower economic growth.