Author: james Carter
- It was a quiet session today in the Australian Equities market, however the ASX200 ended on its lows, down 32 points to 5,193.
- The banks had a breather from leading the pack in positive territory as of late and were broadly weak. Commonwealth Bank (CBA) ended 0.8% lower to $79.00.
- In the consumer staples front, Woolworths (WOW) had a late rally in the afternoon, after reports of the company approaching a corporate advisory firm with regards to a potential Big W sale. WOW rallied 1.4% to $24.38.
- Santos (STO) had a positive day, ending 3.5% higher to $4.17.
Best Sector – Energy
Worst Sector – Telcos
The Copper Price implies no economic recovery on the horizonGood morning everyoneOverviewThe financial press often refers to copper as “Dr Copper” due to its historically unique ability to forecast economic trends so with it falling another 13% this month concerns are rising!This relationship makes sense because copper is used in most sectors of the economy e.g. homes, factories, electronics leading to the base metal being view as a reliable economic indicator. We currently have a slowing Chinese economy in the mix which has an enormous influence on the copper price but not as much on the US / European economies; hence perhaps the ‘Dr Copper’ effect might be diluted from a world perspective this time around.Nevertheless, it is the Chinese economy and base metal prices that have a profound effect on the Australian economy and related share prices.Turning to the MarketsMarket Matters has been, and remains, bearish copper since Market Matters began, targeting sub 150 – still 25% below today’s prices – see chart 1. This prediction was based on concern over China going forward and a very bearish technical chart pattern.Obviously this was a big call when copper was trading close to 350 as was the call for BHP to fall from the mid $30 region to around $20 BUT never underestimate what the market can do!Interestingly, Copper, the BHP ADR market and Newcrest Mining (NCM) long term charts all have very similar “false breakout” characteristics that have a high statistical negative ramification- see charts 1, 2 & 3.The Market Matters call has not directly made money but the 100% avoidance of the resources space apart from the occasional trade and a very recent aggressive BHP play has saved an enormous amount of money and stress.
- The ASX 200 lost some ground today as expected, finishing 44 points lower (-0.8%) to 5,232 with the banks and materials sector providing plenty of weight below water.
- National Australia Bank (NAB) was the weakest link of the big 4 banks, ending its day $0.38 lower (-1.3%) to $29.84.
- BHP continues to disappoint and reach new lows since the GFC. BHP closed 1.8% lower to $19.71.
- In the Health Care sector, Healthscope (HSO) slid 6.7% lower to $2.64, after HSO confirmed with its investors that Private Equity groups, TPG and Carlyle have sold their stake. HSO finished 6.7% lower at $2.64.
Best Sector – Energy
Worst Sector – Materials
How are Apple, Amazon and Google looking in the US?Good morning everyone and hope you all had a great weekendOverviewThe financial press keeps referring to the rally in US stocks as not being broad based and led by just a select few stocks; hence, we thought it was time to look closely at the largest 4 household names in the NASDAQ leading the way.The IT / Technology-based NASDAQ has been a very impressive US index over recent years rallying over 350% since the GFC, compared to 68% for the ASX200 – see chart 5. It is close to breaking its all-time high set in 2000 with, on the short-term basis, another 6-7% upside targeting the 5000 area.Turning to the MarketLet’s look at the NASDAQ and its 4 largest stocks for any clues to where this rally may rest / fail:1 Apple $119.30
- A quiet session was experienced today in the ASX 200, finishing the day only 20 points higher to 5,276, with a trading range of 41 points.
- As expected, the majors of the Materials sector were weak – BHP closed 2.1% lower to $20.07 and RIO down 1% to $48.13. Fortescue Metals (FMG) however, was the strongest link and rallied 4.3% higher to $2.18.
- In the Consumer Staples sector, Woolworths (WOW) jumped from its barrier by 3.8% to $24.63, after reports of a conglomerate of private equity players are considering to make a bid for its Big W division. Wesfarmers (WES) also finished up slightly 1% to $39.42 and Bellamy’s Australia (BAL) closing up 5.5% to $10.55
- In the Energy sector, Santos (STO) disappointed, and closed 3.8% lower to $4.00 as investors are concerned with possible dilution after the rights issue is completed.
- The banking sector was up slightly today NAB closed up 0.9% to $30.22 ,CBA up 0.7% to $80.4, ANZ closed up 0.4% to $27.85 and Westpac (WBC) closed up 3c to $31.89
- The health care sector was also slightly up today with Resmed (RMD) up 1.2% to $8.16 and Ramsay HealthCare (RHC) up 0.9% to $67.94
Best Sector – Consumer Staples
Worst Sector – Materials
The ASX200 is roaring into Christmas but remember our 2016 forecast! Welcome to what looks set to be a scorcher of a Friday here in Sydney! This is a short report today because, overall, it appears to be time to sit back and enjoy the ride. Overview The ASX200 has experienced a stunning week so far rallying 264 points (5.3%) to close at 5242 yesterday – see chart 1. The statistics Market Matters has been quoting almost daily over the last week or so look to have worked perfectly, i.e. the average correction in November over the last 5 years is 7.1% and in 2015 it has been 7.5% (to-date). We are now entering the extremely strong seasonal period for equities which usually lasts until late December / early January. In mid-December, 3 of the big 4 banks pay their chunky dividends which is usually a positive for equities as some of this money is likely to find its way back into the market. The local market looks likely to test the 5400 resistance BUT if the Christmas cheer really kicks in, the 5700 area would not surprise. Market Matters remains confident with its long-standing prediction that the S&P500 will reach all-time highs in the 2200-2300 region in the coming months – see chart 2. Importantly now with the market 324 points (6.6%) above recent lows the risk reward for equities is clearly not as attractive as previously even though markets are technically bullish. Hopefully subscribers have followed Market Matters’ general market alerts over recent months and are already fully / mostly invested in the market. Turning to the Market So let’s explore the question “Would you be a seller / buyer now”? Importantly, technical sell areas are approaching for some of Market Matters’ portfolio; initial target areas are highlighted below: 1. Ansell (ANN) $21.93 – Initial target $23 and then $25.
- After an explosive move in the ASX 200 yesterday, it wasn’t expected to see consolidation today, with the broader market ending only 13 points higher to 5,256.
- The Financials continued to provide alpha, with Macquarie Group ending 0.6% higher to $83.00, while Commonwealth Bank (CBA) closed 0.9% higher to $79.83.
- In the materials front, Rio Tinto (RIO) had a volatile session, trading as high as $49.90 this morning, only to reverse and end 0.1% lower to $48.61, while Fortescue Metals (FMG) was the weakest link and closed 3.7% lower to $2.09.
- In the consumer staples sector, Wesfarmers (WES) outperformed, up 0.8 to $39.01.
- Slaters & Gordon (SGH) slumped 12.1% lower to $2.68 after presenting to its shareholders its results of meeting and adjusts its profit figures.
Best Sector – IT
Worst Sector – Energy
Looking outside of the supposed “Blue Chips” for value
- An explosive day in the ASX 200 today, rallying to close 109 points higher to 5,242 after November Index options expiry this morning.
- The Iron Ore names returned back to the hot seat, favourite. Rio Tinto (RIO) was the strongest link, rallying 4% higher to $48.68, despite Iron Ore down 2.8% in Asia and BHP had a strong day also up 3% to $20.42.
- In the Mergers & Acquisitions (M&A) area, OZ Forex (OFX) ascended 30% higher to $3.38 after Western Union provided an indicative proposal worth between $3.50-$3.70.
- NAB was the better bank of the big 4, up 3.2% to $29.72, while CBA ended 1.7% higher at $79.14.
Best Sector – Consumer Staples
Worst Sector – Utilities
The ASX200 soars! Is it time for the Christmas rally? Good morning everyone Overview The ASX200 surged 114 points (2.29%) yesterday, it’s last rally over 100 points a day was in September BUT it’s certainly a long time since the market felt so bullish. The local index is dominated by the banks and they rallied almost 2.5% guaranteeing a strong day, especially with the energy sector gaining 4.6%. Two sectors that have had a shocking year (banks -8.3% and energy -33.6%) rallying for one day does not make a summer but it does make a pleasant change! Let’s just stand back and consider the facts and then were look at some stocks that have struggled in the Market Matters portfolio.Market Matters offer these insights for free on a regular basis – sign up hereTurning to the Markets 1. The average ASX200 pullback in November for the last 5 years is 7.1% followed by a strong rally into January, this year we have corrected 7.5% and then exploded 114 points in one day – see chart 1.
Really bullish, there's more to go in the reflation rally
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