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Month: December 2015

Afternoon Report Tuesday 22nd December 2015

by james Carter

  • The ASX 200 was a disappointment (again) after a good lead from the U S market overnight. Our market started well but faded fast after the opening bell, closing up 7 points to 5,117.
  • On the back of light volume, the resource sector was weak with BHP Billiton (BHP) down all day and closing at $16.83, down 30c. RIO Tinto (RIO) tried harder and was briefly up on the day, but closed down 65c to $42.23. Fortescue Metals (FMG) was also friendless, trading down most of the day and closing down 3c to $1.74.
  • One of the standouts today was Flight Centre (FLT) which traded as high as $39.13 before closing only a bit lower at $38.88, up $1.88 (+5.1%).
  • Oil and Gas stocks were generally stronger with the exception of Origin Energy (ORG) which announced today that they had taken a hedge position against further weakness in the oil price. The market appeared to like this news for a while with the stock trading up to $4.59. But selling came in around mid-day and the stock hit a low of $4.37 before closing at $4.38, down 8c.

Best Sector – Industrials
Worst Sector – Materials

Morning Report Tuesday 22nd December 2015

by james Carter

A quick focus on stocks as the ASX200 tries very hard With the Dow off 3.3% YTD and the ASX200 off 5.8% YTD it has been a tough year in the market. On Thursday and Friday night though the Dow fell a combined ~600 points but the ASX200 managed a small positive gain, a very impressive performance – see charts 1 & 2. With a potential Christmas rally on hand, it’s important to keep an eye on the existing Market Matters portfolio as targets may be reached over the next 1-2 weeks.Market Matters believes any rally towards 5300 or above is an ideal opportunity to lighten overall equity exposure or write call options against some positions depending on what investors prefer or use.

Morning Report Monday 21 December 2015

by james Carter

It’s now or never for the Santa Rally!Good morning everyone and welcome to ‘Christmas Week’OverviewThe press is finally saying “the Santa rally is not going to happen in 2015”, the perfect read for those still having faith.Market matters have repeatedly pointed out that the December highs for the ASX200 since the GFC have been on the 31st, 23rd, 12th, 28th, 31st and 30th respectively i.e. generally very late in the month. The simple average of the last 6 years is the 26th which is still a few days away and the mode (most common occurring date) is the ~30th. Hence, statistically, the average top for December since the GFC is still ~5-10 days away.Turning to the MarketsSo far, this December’s top was on the 1st at 5279, over 3% above Friday’s close and today we have to deal with a 367-point plunge from the Dow last Friday. We have repeatedly focused on the dates for the(post GFC) December highs but let’s now focus on how far the ASX200 rallied into these highs when they occurred after Christmas.

Afternoon Report Monday 21 December 2015

by james Carter

  • A quiet session was experienced today and will likely be for the remainder of the week, as investors shift away from the markets and focus on the festive season.
  • The ASX 200 gained only 2 points (+0.1%) to 5,109, after trading near its lows of 5,075 earlier in the morning, maybe the hope for a Christmas Rally remains.
  • The Banks closed mixed, ANZ was the strongest link, rallying 1.2% higher to $26.79, while WBC closed 0.9% lower at $32.25.
  • Dairy company, A2 Milk (A2M) continued to soar, up 14.1% to $1.58 after trading 33.8% higher last Friday. Investors embraced the company’s comments of a profit upgrade as A2M can’t meet consumers’ demand.
  • With talks of Crown Resorts (CWN) looking to privatise its company, James Packer stepped down as director earlier today, helping CWN to rally 4.1% higher to $12.08.

Best Sector – Energy
Worst Sectors – Telcos/Health Care

Morning Report Friday 18 December 2015

by james Carter

Gold continues to falter but some sector stocks are strongGood morning everyoneOverviewAs the reality of the Fed rate rise sinks in across the markets we have seen some further action over night with Gold falling over $US25/oz testing its lows since early 2010 and money flowing back into $US sending the $A down over 1c, close to ~71c – see charts 1 & 2.In simple terms, a strong $US generally sends the price of commodities lower e.g. Last night Gold -2.4%, Silver -3.7%, Crude Oil -1.7% and Copper -1.3%. This is observed more clearly when looking at the $US Index and the CRB Index (Commodities Index) where the correlation is very close but inverted i.e. the $US has rallied strongly since 2011 and commodities have fallen – see charts 2 & 3.Turning to the MarketsMarket Matters believes that the US$ will top out in 2016 implying that the falling commodities have further downside yet. Thus, patience is required when considering investing in this sector.When compared to equities we see the likelihood being that all these major turns will coincide at the same time ie the high in the US$ will be concurrent with the high in the US equity markets and potentially a low in commodity prices.- see chart 7.

Afternoon Report Friday 18 December 2015

by james Carter

  • The ASX 200 put in a gutsy performance today after a weak lead from the U S. The market finished 5 points higher to 5106, after touching a day’s low of 5,026 in the first 10 minutes of trading.
  • The banks performed well with the Commonwealth Bank (CBA) being hit on the opening and traded as low as $79.52 (down $1.17), but clawed its way back to close up 88c to $81.57. Westpac Bank (WBC) had a similar move with the stock falling to $31.53 (down 65c) and managed to close up 10c to $32.28.
  • The resources were in poor shape today with RIO Tinto (RIO) falling sharply on the opening, ending its day 2.1% lower to $42.46, while BHP closed 0.9% lower to $16.87.

Best Sector – Consumer Discretionary
Worst Sector – IT

Morning Report Thursday 17 December 2015

by james Carter

We have lift off, the Fed raises rates!Good morning everyoneOverviewIt’s been the main topic of discussion in markets for a long time but this morning at 6am AEST the Fed finally raised interest rates, for the first time in almost a decade, by the expected 0.25% – see chart 1.This increase had been widely telegraphed to markets with this morning’s comments from Janet Yellen that further increases would be gradual being interpreted positively rallying the Dow over 150 points after the announcement.As the Fed ended the zero interest rate era it also signalled a target of four more 0.25% rises for the US as the FOMC becomes more comfortable with underlying strength of their local economy. Interestingly, after the rate rise and statement implying a significant four further rises in 2016, the $US Index fell, albeit it marginally … a classic “buy on rumour, sell on fact” scenario.Turning to the MarketsThe Dow closed up an impressive 224 points last night. Market Matters still believes that US equities will make new all-time highs in the short term, a view we have held for some months. Technically we believe that the US markets will rally another 5-6% before completing this major bull market from 2009.- see charts 2 & 3.Investors believing the advance in US equities will continue unabated should look at charts 1 &3:

Afternoon Report Thursday 17 December 2015

by james Carter

  • The guessing game on the US interest rates had ended, and volatility has definitely dropped, as the ASX 200 rallied 73 points (+1.5%) to 5,102.
  • The big 4 banks all lifted, contributing the most in the broader market’s rally. Commonwealth Bank (CBA) inched 2% higher to $80.69, while Westpac (WBC) outperformed the other 3, ending its day 2.3% higher to 32.18.
  • Investors gave up their faith in Slaters & Gordon (SGH), after announcing to the market they have withdrawn their FY16 guidance. SGH disappointingly closed 17.2% lower to $0.89.
  • The miners closed mixed, BHP closed 0.9% lower to $17.02 and Fortescue Metals (FMG) down 3.4% to $1.835, while RIO rallied 0.8% to $43.36.


Morning Report Wednesday 16 December 2015

by james Carter

When will Australia get its “MOJO” back? Good morning everyone Overview For most Australian stock market investors much of 2015 has been like sailing into the wind. Simply compare some the ASX200 numbers with those of the US: 1. For the 2015 calendar year the S&P500 is down 0.4% while the ASX200 is down a very meaningful 9.3% – other markets like Germany, Japan and New Zealand are nicely in the black.

Afternoon Report Wednesday 16 December 2015

by james Carter

  • The ASX 200 was for a change a breath of fresh air. The market rallied 118 points (+2.4%) to 5,028, the largest one day move in four months!
  • Sectors that have been a major source of pain over the last few weeks to months enjoyed a day of respite.
  • The comment was made on more than one occasion that “The market must be strong, even BHP (BHP Billiton) is up”. Indeed, it finished the day up $0.91 (+5.6%) to $17.18. RIO Tinto (RIO) was also strong, but “only” up 3% to close at $43.02.
  • The Banking Sector performed in line with today’s sentiment with Australian New Zealand Bank (ANZ) up $0.68 to $26.01, Commonwealth Bank (CBA) up $2.22 to $79.09, National Australia Bank (NAB) up $0.72 to $28.38 and Westpac (WBC) up $0.86 to $31.46.
  • A stand out in the market was Crown Resorts (CWN) with a report that James Packer had been in consultation with Private Equity firms to bid jointly for Crowns assets. The price closed up $1.12 (+10.5%) to $11.77, after a high of $12.23.

Best Sector – Energy
Worst Sector – Health Care

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