A slow start to the week (OZL, BOQ, FMG, STO)
A subdued day to start the week, the market crept higher testing the 5950-resistance level again, but there we mixed fortunes at a stock and sector level. Real Estate stocks fared the worst, telcos fell as well despite Vocus ralying 5.4%. Energy stocks were the best performers in the market today after oil jumped 2.9% on Friday night. Overall a very tight range today of +/- 24point, a high of 5927, a low of 5903 and a close if 5919, up 15pts or +0.27%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
We pulled our buy order for Oz Minerals (OZL) before market today on the back of a weak lead from Copper. As the underlying metal fell below $US300/lb, it changed the short term technical picture. We are not completely off OZL however, and if fortunes turn this weakness may present an opportunity to buy at lower levels than our original target while the outlook still looks good medium-term.
OZ Minerals (OZL) Daily Chart
Bank of Queensland (BOQ), which goes ex-div on Thursday for $0.38 + $0.08 special FF, was the pick of the financials. It was a similar story in the big 4, with the three banks that go ex-div in November finishing higher - ANZ, NAB, WBC - while CBA was off slightly. Clearly some seasonality work playing out here as money moves towards the healthy dividends set to come out of the banks in November. This is an area we will likely take some profits in in the coming few weeks - we own BOQ, CBA, NAB, WBC in the Growth Portfolio, and CBA & NAB in the Income Portfolio.
Bank of Queensland (BOQ) Daily Chart
Fortescue (FMG) was weaker today after Iron Ore stockpiles in Chinese ports increased to the highest level in two months. Policy makers have moved to limit the Steel production through the Chinese winter as it has a significant effect on air quality. Iron Ore has entered a bear market for 2017, falling 24%, and we are looking for a signs of a bottom before allocating further to the resources space. It is likely we will look to some of the bigger names in BHP or Rio Tinto if weakness plays out, preferring to have some diversified exposure against the volatile Iron ore price.
Fortescue Metals (FMG) Daily Chart
Santos (STO) continued its strong run today, climbing 3.7% in line with Oil’s performance over the weekend. Trading in Santos was 40% greater than the 30-day average, while 4 times the 20-session average of STO call options exchanged hands throughout the session. We recently sold our Santos holding in the Growth Portfolio, and while we are disappointed to have missed out on some upside, we are also satisfied with the profit we took and happy to leave some on the table for what is a volatile stock.
Santos (STO) Daily Chart
Have a great night
The Market Matters Team
Disclosure
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
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