Month: September 2015
History repeats yet again!Good morningOverviewToday’s report is deliberately short to focus on the specific opportunities arising.Over recent weeks we highlighted the 25 days of consolidation which the ASX200 experienced after its initial 600 point decline looking for repetition of this 25 day move from the more recent 800 point decline.. and history has repeated itself to the day! – see charts 1 & 2.The ASX200 has again traded in a corrective sideways pattern for 25 days prior to breaking to fresh quarterly lows with a vengeance yesterday.Investors have withdrawn funds from emerging markets at the fastest rate since the middle of the GFC with the MSCI Emerging Markets stock index falling 20% over the last 3 months as outright panic has set in.Turning to the Markets
- What a difference a day makes. A nice rebound in the market today saw the ASX 200 finish + 103 points (2.0%) to 5,021.
- The complete opposite to yesterday of course in that the banks and resources were all in rebound
- BHP Billiton (BHP) finished up 2.8% to $22.22 and RIO Tinto (RIO) was up 4.8% to $48.60. Fortescue Metals excelled, up 9% to $1.82
- In the banking sector the stand out was Commonwealth Bank (CBA), which was up 3.7% to $72.72.
- On the corporate side, Origin Energy (ORG) is raising $2.5b through an entitlement offer. It further announced an additional $2.2b of “cash preservation” initiatives together with a slashing of the 2016/17 dividends. The stock was suspended pending resolution of the raising.
Best Sector – Banking
Worst Sector – Utilities
Are we heading for an early October low?Good morningOverviewAs has been mentioned previously, the ASX200 has been gaining strength even though, ironically, it is likely to open down 100 points this morning. Over the last 3 weeks the Dow has fallen 932 points (5.5%) from its intraday high yet the ASX200 over the same the period is down only 82 points (1.6%).The global equities’ markets are performing as Market Matters has been predicting with the likelihood of a very strong buying situation arising in the very near term. Buying into weakness at the right time is likely to provide strong, well risk-weighted returns.Today will be a test of the local market’s resilience! Glencore fell almost 30% last night as global resource stocks continue to be hammered with BHP’ US ADR’s indicating an open ~$21.80 (-5.8%).However, historically the stocks that create most of a market’s weakness usually bounce the hardest and for the ASX200 that is the banks which rallied strongly yesterday; and don’t forget, 3 of them go ex-dividend in coming weeks.Turning to the Markets
- An absolute rout is what best describes the ASX 200 index today. The market closed on its lows, down 195 points (3.8%) to 4918.
- Across the board selling caused one of the biggest falls we have seen since 24 August (- 4.1%). BHP Billiton (BHP) was down 6.7% to $21.61 whilst RIO Tinto (RIO) lost 4.6% to close $$46.52.
- The banking sector was hit hard with Australia New Zealand Bank (ANZ) down 3.7% to $26.38, National Australia Bank (NAB) down 3.6% to $29.20 and Westpac (WBC) down 3.8% to $29.10. Commonwealth Bank (CBA) was marginally better, down 3.5% to 70.15.
Best Sector – IT
Telco stocks trading individually NOT as a sectorGood morningOverviewJUST ANNOUNCED at 8am in the AFR, after 90% of this report was written, VOC and MTU set for $3bn merger!!! This should be very positive to both stocks due to cost savings and other synergies.Standing back from the above announcement, the market has treated the Australian Telco’s on a very individual basis compared to the banking sector that has basically moved as one large unit. Interestingly however, the negative standout in the Telco’s is Telstra and the way it has been treated very similarly to the out of favour banks / “yield play”; that said, November’s looming dividend is potentially adding some short term support.Importantly Vocus which Market Matters has been fan of over the year is only 10c below the technical target of fresh all-time highs for 2015. With this morning’s announcement we will be watching the price action with a view to taking profits and potentially switching to a better opportunity.Turning to the MarketsBelow is a simple snap shot of 5 Australia’s leading Telco’s:
- A surprising rebound in the ASX 200 today, rallying 71 points to the close, at 5,113.
- The banks surprised and rallied well today. Commonwealth Bank (CBA) closed 1.8% higher to $72.70.
- BHP Billiton (BHP) managed to swing back into positive territory, ending 1% higher to $23.15 after trading as low as $22.39.
- In the M&A section, we witnessed a disappointing performance from VOC (and MTU). Initially we thought the synergy and benefits of these companies would push the stocks higher, but it quickly became apparent that this was already priced in their share prices, hence our alert to switch from VOC to MQG earlier today.
Best Sector – IT
Focusing on CBA as market fluctuations continueGood morningOverviewMarket volatility continued last night with the Dow falling 263-points before recovering to close down a relatively small 78-points (0.5%). Last night’s price action again illustrated the ease with which stocks are still able to fall but also the buying that appears in periods of significant weakness.All eyes were focused on Janet Yellen at 7am looking for her to give any clues on the Feds direction for interest rates. After the recent turmoil caused by poor communication of her reasons around not raising rates a clearer message of her future intentions was anticipated. To many it came as no surprise when she stated the Fed still intended to raise rates in 2015 as the Fed attempts to both manage the economy and keep markets happy!So we remain firm in our view of the markets where we are looking for a further spike down to the 4900 area on the ASX200 for a strong buying opportunity… however, patience remains the mantra!Turning to the Markets
- The roller coaster hasn’t stopped, but it continues to follow the path that we have been predicting! The ASX 200 started the day up ~50 points, then started to slip and slide, to being ~ 60 points lower. All this was before lunch time! Well, the day finished with the index down 29 point (-0.6%) to 5,042.
- Janet Yellen’s speech this morning, certainly was the main cause of volatility, but it seems that the market can’t decide whether an expected rise in rates later this year will be good or bad.
- The banks were at the brunt of the selling. Commonwealth Bank (CBA) was hit the hardest, down 1.5% to $71.44.
- The miners were better as the day went on with BHP Billiton (BHP) finishing up just 8 cents to $22.93, whilst RIO Tinto (RIO) was stronger, up 65c to $48.95.
- Please watch out for the weekend report.
Best Sector – Consumer Discretionary
When the going gets tough the tough get going!!Good morningOverviewOur reports have had a common theme over recent weeks but stock markets generally only have 2-3 important inflexion points in a year so being prepared for when they occur is VITAL.Market Matters went negative the ASX200 back in April when the index was up over 5900; this included our controversial call to sell CBA over $95 – we are now looking to complete our repurchase of the bank close to $70. We sent out a “buy the market” alert literally within minutes of the low at 4928 on the 25th of August from where the market rallied 377 points (7.6%).We are not looking for a pat on the back because we did start buying stocks back around 5250, almost 5% early, but we have cash ready to aggressively buy if our next prediction is correct. Importantly to us we’re very focussed on ensuring our subscribers consider this next opportunity seriously. If we are correct there is a strong possibility of a final panic low in coming weeks that will be followed by a minimum 10% rally into Christmas – watch for alerts.We know it’s hard to get excited buying a market that’s receiving so much negative press, almost daily, but that’s just what investors generally should do! Investor psychology is a strange things and it is why the uninformed investor more often than not ends up buying at the top and selling at the low!!Turning to the Markets
- A pleasant day was experienced in the ASX 200 on this cloudy day in Sydney, ending the day 73 points higher (+0.5%) at 5,071.
- The Bank sector led the herd today, with the big 4 banks rallying 1.3%. ANZ closed at $27.34, CBA at $72.50, NAB at $30.20 and WBC at $30.36.
- Most of the Iron Ore sector had a breather from descending. BHP closed 0.2% higher to $22.85 and RIO up 0.7% to $48.30, while FMG lost 1.4% to $1.785.
- With risk still seen in the Australian market, gold stocks rallied as investors still seek the ‘safe havens’. Newcrest Mining (NCM) rallied 3.4% to $12.33 and Regis Resources (RRL) up 4% to $1.685.
Best Sector – Consumer Staples
Really bullish, there's more to go in the reflation rally
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