Market Matters Report / Market Matters " Long Weekend" Report - Monday 8th June 2015

By Market Matters 08 June 15

Market Matters " Long Weekend" Report - Monday 8th June 2015

Market Matters " Long Weekend" Report - Monday 8th June 2015

Evening All,

I hope everyone had a great long weekend, I spent mine camping with the family in the cold of the Hunter Valley!

Last week saw aggressive selling in the Australian market with the ASX200 falling 279 points (-4.8%), while most other Western Indices were quiet and Asian markets, while volatile, ended the week with significant gains e.g. China +8.9%. An overall increase in global bond yields (interest rates) led to the selling being felt most in our major "yield play", the banks which fell an average of 6.32%, but there was no sector supporting the market - unfortunately the average retail investor felt last week's fall badly as they are overweight banks.

· The selling was focused indiscriminately via our futures market. In our opinion, large investors "sold Australia" to fund the purchase of other Asian Stock Markets.


It always amazes me how people let short term market emotion effect their thought process with stock market investments and this is arguably one of the most important areas that we believe that MarketMatters can help individuals.

· Only a few weeks ago when I sold CBA up near $95 and continued to target the ASX200 back towards 5200, I received numerous emails basically saying I was "mad". Now, that I have reinvested 40% of my anticipated overall investment in CBA under $81 I am receiving emails saying I am brave!

· Note I actually hope CBA falls further, as I hope to continue buying and bring my average down well under $80.

· We need people to sell without significant thought to an individual company’s merits to create opportunities in order to improve our portfolios.


I can fully understand why Hedge Funds / Portfolio Managers have Australia towards the bottom end of their "love list" as we struggle to move on from the Mining Boom. However, with local official Interest rates at 2%, and unlikely to race up any time soon, the banks are suddenly starting to over some excellent yield again e.g. CBA ~ 5% fully franked. The banks are trading around 5% above their long term P/E ratio, BUT local interest rates are at historical lows justifying most of this 5%.

· "We simply attempt to be fearful when others are greedy and to be greedy when others are fearful" - Warren Buffett.


Overall I still think the market will trade lower, but I believe a good bounce / period of out-performance may be close at hand for the ASX200.

Summary:

No major change here:

1. I will remain patient on further purchases, but I now have my buyer hat in place.

2. I continue to have no interest investing in the resources sector.


* Watch out for alerts.

What Matters this week

The ASX200 looks likely to open down 10 points on Tuesday.


Potential Investing opportunities for the coming week

· Hopefully investors are now sitting on a healthy cash position awaiting buying opportunities – see above.

Potential Trading for the coming week

· Short term I think a 100 point bounce is close at hand led by the banks.

· I still see fresh lows from Santos (STO).

· For aggressive traders / investors I am watching Myer (MYR) and Regis Resources (RRL) closely into fresh 2015 lows.



Portfolio Holdings

My portfolio undeformed the market last week where the ASX200 fell 4.8%, but my large cash position held me in good position.


1. Bank of Queensland (BOQ) -6.6% - medium term investment.

2. Commonwealth Bank (CBA) -5.6% - long term Investment.

3. Mirvac (MGR) -5.7% - medium term investment.

4. Vocus (VOC) -2.4% - Medium term investment.


Cash for future purchases, ~35%.

Australian ASX200

I continue to look to spread my portfolio into more growth and offshore earning stocks going forward but importantly patiently.

Chart 1 – ASX200 Monthly Chart

Chart 2 – ASX200 Weekly Chart

Chart 3 – ASX200 Daily Chart

Chart 4 - SPI (Share Price Index) Futures 60 mins Chart

Chart 5 ASX200 REIT Index Monthly Chart

Chart 5b ASX200 Banking Index Monthly Chart

Chart 6 Volatility Index VIX Weekly Chart

Chart 7a – The US 10-year Interest Rate Quarterly Chart

Chart 7b – The German 10-year Interest Rate Quarterly Chart


American Equities

The American indices continue to show signs of topping out for 2015.

Chart 8 – Dow Jones Index Monthly Chart

Chart 9 – Dow Jones Index Daily Chart

Chart 10 – S&P500 Monthly Chart

Chart 11 – NYSE Composite Index Monthly Chart

Chart 12 – Russell 2000 Index Monthly Chart

Chart 13 – NASDAQ Monthly Chart

Chart 14 – The Canadian Composite Index Monthly Chart


European Indices

European Indices still look have the potential to rally another 2-3% aided by ECB stimulus but Friday was surprisingly weak.

Chart 15 – Euro Stoxx 50 Weekly Chart

Chart 16 – FTSE Weekly Chart

Chart 17 – Spanish IBEX Monthly Chart

Chart 18 – German DAX Monthly Chart

Chart 19 – German DAX Daily Chart


Asian Indices

Asian indices are very bullish at present, led by China as it opens its market to offshore investors, Japan is still receiving great strength from ongoing aggressive QE.

Chart 20 – Hang Seng Weekly Chart

Chart 21 – China Shanghai Composite Monthly Chart

Chart 22 – Japanese Nikkei 225 Monthly Chart


Australian Stocks

Quality stocks with sustainable yield have been standouts but some industrial stocks are now looking better. I no longer am a net seller of the “yield play” after its 15% correction and looking to buy growth / yield stocks BUT not resources.

Chart 23 – BHP (US) Monthly Chart

Chart 24 – BHP Weekly Chart

Chart 25 – Woodside (WPL) Monthly Chart

Chart 25b – Santos (STO) Weekly Chart

Chart 26 – RIO Tinto (RIO) Weekly Chart

Chart 27 – Fortescue Metals (FMG) Weekly Chart

Chart 28 – Vale (US) Weekly Chart

Chart 29 – Newcrest Mining (NCM) Monthly Chart

Chart 30 – Regis Resources (RRL) Weekly Chart

Chart 31 – Barrick Gold Corp. (US) Monthly Chart

Chart 32 – CBA Quarterly Chart

Chart 32b – CBA Daily Chart

Chart 33 – ANZ Bank (ANZ) Monthly Chart

Chart 33b – ANZ Bank (ANZ) Daily Chart

Chart 34 – Westpac Bank (WBC) Weekly Chart

Chart 34b – Westpac Bank (WBC) Daily Chart

Chart 35 – National Bank (NAB) Weekly Chart

Chart 36 – Macquarie Bank (MQG) Monthly Chart

Chart 37 – Bank of Queensland (BOQ) Weekly Chart

Chart 38 – AMP Weekly Chart

Chart 39 – Challenger Financial (CGF) Monthly Chart

Chart 40 – Suncorp Group (SUN) Monthly Chart

Chart 41 – Insurance Australia (IAG) Monthly Chart

Chart 42 – QBE Insurance Monthly Chart

Chart 43 – Wesfarmers Ltd (WES) Weekly Chart

Chart 44 – Woolworths Ltd (WOW) Quarterly Chart

Chart 45 – Seek Ltd (SEK) Monthly Chart

Chart 46 – Telstra (TLS) Monthly Chart

Chart 47– M2 Group Ltd (MTU) Monthly Chart

Chart 48 – Vocus Communications (VOC) Weekly Chart

Chart 48b – TPG Telecom (TPM) Monthly Chart

Chart 49 – Westfield Corp. (WFD) Monthly Chart

Chart 50– CSL Ltd (CSL) Monthly Chart

Chart 51 Ramsay Healthcare (RHC) Monthly Chart

Chart 52– Resmed (RMD) Weekly Chart

Chart 53 - Fairfax Media (FXJ) Monthly Chart

Chart 54 – Crown (CWN) Monthly

Chart 55 – Coca-Cola Amatil (CCL) Monthly

Chart 56– Myer Holdings (MYR) Weekly

Chart 57– JB Hifi (JBH) Monthly

Chart 58– Harvey Norman (HVN) Monthly

Chart 59– Australian Dollar (AUD) Weekly Chart

The $A continues to decline with an ultimate technical target now well under 70c.

 

Commodities

I am now neutral Gold as rising interest rates could easily derail the recent strength. I have divergence with the stocks and precious metal.

Copper remains very negative on a longer term basis, a very similar chart pattern to Newcrest Mining (NCM) and unfortunately we all saw what happened there.

Crude Oil has bounced as anticipated; I still expect renewed weakness over coming months.

Iron Ore is 50-50 here BUT the trend is clearly down and long term futures remain bearish.

Chart 60 – Gold Monthly Chart

Chart 61 – Copper Monthly Chart

Chart 62 – Crude Oil Monthly Chart

Chart 63 – Iron Ore Monthly Chart


Please note this is my personal TECHNICAL opinion of markets and "General Advice" taking no account of individual’s circumstances.

Have a great week,

MarketMatters Team


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