Not a lot to hang ones hat on today! (OZL, ALL, JHC)
The market chopped around par today eventually closing marginally higher as buyers got on top of the early sellers…the Utes did best, while the banks were weaker earlier however recovered into the afternoon session – the financials closing down –0.19%. A range of +/- 23 points, a high of 5908, a low of 5885 and a close of 5897, up +3pts or 0.06%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Oz Minerals (OZL) – came very close to our BUY price today hitting a low $8.26 before bouncing back up to close at $8.34. We’re looking to buy anywhere below $8.25 and todays move was slightly frustrating, however given our views on the short term direction of the mkt – likely to consolidate / soften near term, then worth holding fire. I had a conversation today with a client around cash levels being high – we’re at 20% in the Growth Portfolio and 18% in the Income Portfolio, however that will reduce after we take up the Bendigo Hybrid as discussed last week. It’s always tempting to pay up if the mkt moves higher, and we’re not getting the full benefit of it, however cash = flexibility and given the mature stages of the current bull market, I think flexibility will remain extremely important. As we wrote in the AM report this morning, we now believe there is a very strong possibility that US stocks are commencing a ~5% correction to provide an excellent buying opportunity for yet another exciting Christmas rally. Our feeling is that local stocks will outperform most of their global counterparts if this correction does unfold and the below levels should become important over coming days / weeks:
1. We should see a test of last Friday’s 5870 low in the next 24 hours which is likely to offer some initial support.
2. We see a worst case scenario of a pullback to the 5825 area which we would regard as an optimum buying area.
3. A break back under the psychological 5800 area would negate our current bullish outlook for stocks into 2018.
OZ Minerals (OZL) Daily Chart
Aristocrat Leisure (ALL)– had a good session today on the back of a few positive broker notes following their first Capital Markets day yesterday. Taking a step back for a moment, the mkt has traditionally been sceptical of ALL and therefore priced it on a discount to the broader mkt, partly because they have a poor track record in terms of acquisitions and secondly because it seems like they’re always in some form of ‘transformation’ process, which doesn’t really warm the heart. In short, their tone yesterday was a good balance between being conciliatory and constructive, confronting what they did wrong in the past and presenting a decent plan for the future. We own ALL, we’re up ~14% and the stock looks strong here…
Aristocrat Leisure (ALL) Daily Chart
Japara (JHC) – The aged care space is one we’ve watched for a while now, and the move by Moelis this week to buy nearly 10% of JHC caught our eye with the investment manager saying….Moelis Australia believes that Aged Care is an attractive sector in which to invest and that Japara has quality assets combined with an outstanding record of management, governance and provision of resident care.
Clearly it’s been a sector under pressure however recent trends seem to be improving.
Japara Health (JHC) Daily Chart
Have a great night
The Market Matters Team
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