Skip to Content

Month: May 2016

Market Matters Afternoon Report Tuesday 3rd May 2016

by james Carter

Market Matters Morning Report Tuesday 3rd May 2016

by james Carter

Ouch we’re long Westpac! Yesterday certainly fitted that old sporting adage for Market Matters – “a game of two halves”. Regis Resources (RRL) Firstly we were able to realise excellent profits – around +27% by selling our Regis Resources (RRL) over $3 yesterday, a position that was initiated on the 17th of March. Selling is a weakness of many investors who unfortunately fall into the habit of “running losses and cutting profits”. We are more aligned with the motto “plan your trade and trade your plan” – obviously the word trade can be replaced with investment. When we purchased RRL the plan was to take profit over $3 unless circumstances had changed; they had not hence we sold. Overnight gold initially rallied strongly over $US1300/oz before falling away and closing slightly lower – gold ETF’s were down 1.7% in the US. Our view is gold is likely to retrace back towards the $US1200/oz area in coming weeks / months where we currently intend to buy back into the sector. Statistically May is the strongest month for the $US since the GFC which is clearly a negative for gold. This correlation may be linked to seasonal factors like – weak stocks and commodities plus U.S. economic data often improving in May aided by weather. Either way statistics like this should be respected, and we are comfortable watching gold at present. Also remember we have no ego with investing and will happily buy RRL back at higher prices if we perceive good risk / reward – just like we did this time! Gold Weekly Chart

Market Matters Afternoon Report Monday 2nd May 2016

by james Carter

Market Matters Morning Report Monday 2nd May 2016

by james Carter

Looking at 3 recent underperformers as potential “catch up” stories. So far 2016 has been the year where stocks that have been the significant underperformers have dramatically become the market darlings on a combination of changing economic circumstances and aggressive short covering. Some noticeable examples of this are in the resources and energy sectors e.g. BHP +16%, RIO +15%, FMG +82% and STO up 30%. Many hedge funds that have enjoyed significant profits from short positions in these sectors over recent quarters / years have been forced to cover sending these heavyweights soaring. One day gains of 5-6% have occurred on the back of ‘less bad’ corporate news or simply mass short covering. This morning we are looking at three stocks that still have large short positions and have the potential to emulate our miners / energy stocks. We have deliberately chosen three stocks that we do not discuss often but may “squeeze” higher if the correct circumstances unfold as hedge funds are now clearly more trigger happy to cover shorts. However it should always be remembered that hedge funds are professional investors who often get it right, all 3 of the stocks we are looking at have been in downtrends for a number of years, hence prudent money management must be used when playing in this space. Note; short covering is when traders who have sold a stock they do not own, hoping to profit by buying back cheaper, repurchase that sold stock. Orica (ORI) Monthly Chart

Back to top