Market subdued – Nanosonics a left field pick! (NAN, WES, IGO, OZL)
A strong lead overnight turned into an OK session today as the 5900 level once again proved to be a sticking point for the market. Highs were reached early but confidence faded, led by disappointing CPI data coming in below the RBA target range at 1.8% for the year. This was most disappointing for Consumer staples, the worst performing sector, falling 1.24%, while energy and materials charged on as global growth seemingly continues to pick up. Overall a range today of +/- 24points, a high of 5919, a low of 5895 and a close of 5905, up 7pts or 0.14%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Independence Group (IGO) - The morning IGO posted September quarter production numbers with strong Nickel results which is the key to this stock now.. Nova Nickel hit the top end of guidance, while the Tropicana gold production numbers hit the middle of the range. Free cash flow was also strong which the mkt liked. It’ll be interesting to see how the shorts react to this result, IGO climbed to an intraday high up +4% on yesterday’s close before finishing over 2% higher this afternoon. Hopefully the shorts start to scramble and this drags the stock up strongly. We own IGO in the Growth Portfolio
Independence Group (IGO) Daily Chart
Wesfarmers (WES) - In contrast, Wesfarmers announced their first quarter sales this AM which disappointed. LFL sales in Coles was weaker than expected at 0.4% QoQ, but possibly most disappointing was the price deflation, where prices fell 2.3% driven by fresh foods. Clearly margins in supermarkets continue to come under pressure, and there could be some way to go given Australia’s supermarkets have some of the highest margins v global counterparts and competition continues to grow. Bunnings, Kmart and Officeworks made some ground however it was not enough to offset poor outcomes from the largest part of the Wesfarmers group. The stock closed down 2.9% to $41.49. We have no interest in WES or WOW for that matter.
Wesfarmers (WES) Daily Chart
Current MM Trades – Two positions in play at the moment, with today’s alert on Nanosonics (NAN) slightly left field, however the technical picture of that stock simply looked exceptional, and the stock has a low correlation to the broader market, or in other works, if the mkt corrects, NAN is unlikely to be hit hard and will more than likely run its own race. It is a $850m company and resides in the S&P/ASX 200 however more unconventional versus our usual picks.
That said, we got set early in the MM portfolio, however concede that liquidity is very low in the stock and it moved quickly. We would be comfortable from a risk / reward perspective to increase our buy range to around $3.00 up from around $2.90.
Nanosonics (NAN) Daily Chart
Oz Minerals (OZL) - is another we have a BUY in for at $8.24, with the stock hitting $8.26 yesterday. The sub $8.25 buy alert remains active this week however we are not advocating chasing the stock, preferring to wait for the stock to come to us.
Oz Minerals (OZL) Daily Chart
Have a great night
The Market Matters Team
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