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Month: February 2016

Morning Report Tuesday 23 February 2016

by james Carter

Good morning everyone Overview Equities have rallied strongly from the panic lows of 10th / 11th February with the ASX200 up 6.3% and the S&P500 up ~7.2%. As readers are aware, Market Matters had been looking for this low based upon various analytics but we also remain cautious about whether the US market can follow through taking the S&P500 to fresh all-time highs i.e. Phase 5 on the chart below. After going virtually fully invested into this recent weakness, Market Matters is now wearing its seller’s hat looking to slowly increase cash levels into strength. The likelihood is that equities will rally into March, or April, before turning back down as investors start to focus on the dreaded “sell in May and go away”. The S&P500 is now 10% below its all-time high so we are watching closely for any triggers that would suggest it will fail to rally towards the 2200 area.

Afternoon Report Monday 22 February 2016

by james Carter

  • The ASX 200 started the week on a positive note, rallying 48 points higher (+1%) to 5,001.
  • The broader market was mostly supported by the resource sector, with BHP rallying 3.4% higher to $17.18, while Fortescue Metals (FMG) continues its resilience, up 9.1% to $2.17.
  • The banks closed mixed, with ANZ the weakest link, ending its day down $0.08 (-0.3%) at $23.32.
  • Brambles (BXB) excited the market after announcing its half yearly profit of US$290.9m and lifting its growth guidance. BXB closed 8.5% higher at $12.00.
  • Some majors in the gold sector retreated, as investors were clearly back on the risk trade, and away from the ‘safe haven asset’. Newcrest (NCM) closed 0.3% lower at $15.86.
  • Health Insurer, NIB Holdings (NHF) rallied 7.3% higher to $3.52 after warming investors with its positive half yearly report.
  • Tomorrow morning investors will focus on BHP’s numbers and whether or not it will cut its dividend.

Best Sector –Industrials
Worst Sector – Utilities

Morning Report Monday 22 February 2016

by james Carter

Overview With the ‘position of the market’ thoroughly covered in our weekend report, this morning’s report will focus on Telstra (TLS), a stock we have mentioned recently because it’s a chart pattern that has been catching our eye. Telstra TLS clearly remains out of favour with investors with the stock falling 5.2% last week compared to the ASX200 which rallied 3.9%. This weakness likely coincides with the market’s recent overall improved confidence because TLS is often perceived to be a relatively “safe haven” and, hence, generally outperforms in times of significant market weakness. Nevertheless, investors should always stand back and look at the bigger picture where TLS has been a poor performer since early 2015, enduring an almost 25% correction, compared to the markets 21.5%. Specifically, when we look at its main Telco rivals Vocus (+115%) and TPG Telecom (+88%) share price performance since the start of 2014, TLS’s +0.6% can only be described as simply awful. Professional investors have enjoyed the rallies in VOC and TPM whereas not necessarily so for the retail investors who chase the yield of TLS; but is this a “trade crowded” trade and will TLS be ready to play some catch up? TLS has just announced a $2.09bn first half profit, declaring a 15.5c fully franked dividend but, notably, an increase in revenue was offset by rising operating expenses. Market Matters is not infatuated by TLS as a company with their profit margins for mobile, data and IP businesses looking to be under pressure. Nevertheless, they do have clear stability with cash on the balance sheet. Technically TLS looks very similar to the GOLD ETF shown below and also the Emerging Markets Index / Fortescue (FMG). This is a positive risk / reward picture. If TLS falls to ~$5 (5% lower) in coming weeks, ideally before its 15.5c fully franked dividend on the 1st of March, it represents good risk / reward buying.

Morning Report Friday 19 February 2016

by james Carter

Good morning everyone Overview This month the ASX200 is up 1.8% whereas the large supermarkets are up an impressive 4.6%! But it is a tale of very different performance when we look closer. Market Matters are a market leading advisory service, to subscribe to their free newsletter click here Turning to the markets Focusing on the two big players in the sector we can see that Wesfarmers (WES) is up 10.3% but Woolworths is actually down 1.1% over the same time which poses a few questions e.g. Is Woolworths poised to catch up or does it remain in trouble. Market Matters recommended selling WOW when it was ~$34, prior to the majority of its 43% fall, using the UK market as a leading indicator. When we look at the large UK supermarkets like Tesco and Sainsbury’s we have seen minor bounces in recent weeks but clearly no change to the negative trend. While in the short term Tesco looks set for a further 10% bounce following its massive 72% collapse, the technical indicator is a trading opportunity not an investment signal. Market Matters are a market leading advisory service, to subscribe to their free newsletter click here Let’s move on and focus on WES and WOW individually. Wesfarmers (WES) $43.78 WES has been a strong performer this month enjoying the disruption within its main competitor to Bunnings. Technically WES looks set to make fresh all-time highs over $47 as it appears destined to receive any money allocated to the sector. Market Matters are a market leading advisory service, to subscribe to their free newsletter click here Woolworths (WOW) $23.10 WOW has been languishing since early 2014 as margins have come under intense pressure from overseas competitors entering our market e.g. ALDI. Technically, the stock has reached our target area but, similar to the UK supermarkets, there have been no buy signals generated.

Afternoon Report Thursday 18th February 2016

by james Carter

  • The ASX 200 continued recovered all of yesterday’s losses, and more, rallying 110 points higher (+2.3%) to close at its day’s high of 4,992.
  • The Resources returned with a vengeance after yesterday’s performance. BHP closed 6.1% higher at $16.95, while Fortescue Metals (FMG) rallied 11.5% higher at $2.09.
  • Telstra (TLS) reported their 1H marginally higher than consensus, and closed 0.6% higher at $5.40.
  • Unemployment rose 0.2% more than expected at -6%, providing further opportunity for a rate cut or two this year.
  • Banks rallied today, with Westpac (WBC) the strongest link, up 2.8% at $29.98 and NAB the weakest link, yet still strong, ending its day up 2.5% at $26.16.

Best Sector – Energy
Worst Sector – Health Care

Morning Report Thursday 18 February 2016

by james Carter

Good morning everyone Overview Market Matters are a market leading advisory service, to subscribe to their free newsletter click here Today’s report is covering a theme we have discussed over recent weeks BUT because we believe it’s so important to be clear on our view for 2016 we feel compelled to clarify it in simple terms. US equities have rallied strongly for a 4th straight day and suddenly they are 6.6% above their lows and less than 10% below their all-time highs! Market Matters has been pushing against the crowd over recent weeks calling a fresh all-time high for US stocks in 2016, admittedly a view that, at times has been hard to reconcile. We can assure you that this report is certainly not focussed on how well we have called it (so far) but, of course, we are glad not to have panicked and dumped all our stocks 5-6% lower; and more importantly, let’s prepare for the unfolding volatile path ahead. Turning to the Markets If you stand back and simply look at the two long-term charts for the S&P500 shown below and without knowing what they represented, most investors would say it’s just been a healthy correction similar to 2009. However, we have all felt the “Gut Wrenching” volatility since the start of 2016 and the press has bombarded us with negative stories from China to credit spreads blowing out – doom and gloom sells papers. Market Matters believes that some of the news that has hit markets over recent weeks may come to fruition over time and help our medium-term view for equities become reality. Medium-term, after a move to fresh all-time highs in the S&P500 we are predicting an unpleasant correction to the whole advance from 667, the 2009 low, this correction is likely to be ~40% targeting ~1550 in the S&P500 = yuk! Market Matters still believes the January statistic will be accurate (“when January is down, US stocks have fallen 72% of the time”) but how the market trades in the middle of the year has no change to this outcome. We have recently increased our equity holdings to over 95% after recent short-term forays into the resources sector in BHP, FMG and RIO, at current levels we are now wearing our “Neutral Hat”. Considering our medium term outlook for equities it should come as no surprise to anybody that we are looking to steadily reduce our exposure into strength with some sell levels outlined in recent reports.
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Afternoon Report Wednesday 17 February 2016

by james Carter

  • A frustrating and choppy session experienced today with the broader market. The ASX 200 ended 28 points lower at 4,882 after trading as high as 4,926.
  • The big 4 banks again closed mixed, NAB rallied 2.1% higher at $25.52, while ANZ lost 0.6% at $23.14.
  • The energy sector was hit hard after the rumours of oil production cuts turned out to be false. BHP closed 3.7% lower at $15.98, while Woodside Petroleum (WPL) closed 6.9% lower at $27.49.
  • A couple of winners in the earnings season today, Primary Health Care (PRY) rallied 20.5% higher after posting positive 1H results and confirming its outlook. As with The Reject Shop (TRS), surprising retailers with their sales growth. TRS closed 23.8% higher at $12.50. Dominos Pizza (DMP) just doesn’t stop delivering service with a smile. DMP rallied 6% higher at $55.52 after announcing another profit up grade in its half year results.

Best Sector –Consumer Discretionary
Worst Sector – Energy

Morning Report Wednesday 17 January 2016

by james Carter

How do the resources stocks look after the recent market kick?

Afternoon Report Tuesday 16 February 2016

by james Carter

  • The ASX 200 continued its strength so far this week, although it looked like it was going to do last week’s selloff shenanigans earlier in the day. The ASX 200 rallied 66 points higher (+1.4%) towards the close at 4,910.
  • The standout of the day was Crude oil, which climbed higher today on rumours that Saudi Arabia and Russia were meeting. (Electronic media running the market) At 4pm AEST the Crude Oil price was up US$1.36 (+4.6%) to US$30.79.
  • Commonwealth Bank (CBA) announced another issue of CBA PERLS. The issue is a $1.25b Tier 1 Hybrid Issue with an expected rate of between 5.20 and 5.3%. This is well below their existing issue which is yielding 5.8%. CBA closed $1.70 lower at $72.60, it was however trading ex-dividend at $1.98.
  • On the second day back from their week long holiday for the Lunar New Year, China enjoyed a strong morning of trading. At their lunchtime close the Shanghai Index was up 2.8% to 2,824.
  • The Miners had a good day with BHP breaking higher late in the day, up 61c (+3.8%) to $16.59, whilst RIO finished off its high of $43.44, closing up 98c (+2.3%) to $43.20. Fortescue Metals (FMG) had a strong move, back up to its recent highs of last week, finishing up 7c (+10%) to $1.875.

Best Sector –Energy
Worst Sector – Telcos

Morning Report Tuesday 16 February 2016

by james Carter

Looking at Market Matters stocks that are struggling

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