Australian Investment Blog

Good afternoon everyone

Market Data

What Mattered Today

1. We’ve been looking for some light weakness in the market over the past week or so, and we’ve started to see that today. Again, conviction was low despite stock option expiry; however we’re starting to see books being squared before the 4 day Easter break.

2. A high in the morning followed by a pretty lacklustre day on the index – with a -24pt loss

3. We were discussing at lunch today with a few of the Market Matters team, how complacency has crept into the market, and that generally makes us nervous. We’ve highlighted the volatility index which is sitting around 14 – and that often corresponds with some type of market high – or at the very least, it makes it cheap to buy portfolio protection (via put options) or if you remain bullish, it’s cheap to buy call options. Selling options unless part of a longer term strategy is marginal at these levels

4. We’ve still got the ultimate view that markets track higher, the S&P trades above 2100, the ASX 200 trades up towards 5300/5350 however, it’s unlikely to go there in a straight line. Subscribers know that we’ve been on the side of a 2-3% pullback for the last week or so, as markets look to take a breather. We’ve got cash in our portfolio of +27%

5. Consensus always scares us. For instance, if the vast majority are upbeat a certain stock/sector/market view, then the marginal buying or seller (depending on the direction of the view) probably isn’t there for that view to play out. In short, the crowd is more often wrong than right. At the moment, the crowd seems poised for higher levels

Stocks On The Move

1. Ardent Leisure (AAD $2.33, +6.88%) – Takeover speculation after strategy review & growth uplift

• UBS has ignited some takeover speculation around Ardent, and the stock has rallied today which comes on the back of a good rally yesterday after they announced their intention to sell their marina’s unit (about 13 of them around the country including Akuna Bay for those in Sydney). They’ll also do a review of their health clubs business and any funds raised will be invested in their Main Events business – which delivers them a higher level of growth.
• So, the marina division which has v’little operational synergy with the rest of the divisions – and lacklustre growth will be replaced with investment into a higher growth US based business with operational synergy so the stock gets bid up
• Technically, the stock looks good and has broken out its recent range on decent volume.

2. Gold Stocks (In the red today)

• Interesting turn of foot from the GOLDS today with the sector under pressure. As mentioned in the AM report, the USD has a big bearing on prices and we saw an upward move in that today (and downside for the AUD to 0.76c)
• It’s always telling to look at selling pressure when sectors/stocks/markets pullback and see where the weakest longs are held
• Clearly, Newcrest (NCM) has some weak longs with the stock off -4.76% while Regis Resources (RRL) was reasonably well supported in a weak sector…That’s a reasonable sign.

ASX 200 Movers

Regards,

The Market Matters Team

All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 23/03/2016. 4.13PM.

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