Market Matters Report / Market Matters Weekend report Saturday 12th March 2016

By Market Matters 12 March 16

Market Matters Weekend report Saturday 12th March 2016

Market Matters Weekend report Saturday 12th March 2016

 Market Matters Weekend Report


Overview

This weekend's report is relatively short because stock markets have unfolded exactly as we have been forecasting; hopefully that's not the kiss of death to our views!

The ASX200

The ASX200 advanced 1.5% last week led by the banks which gained 3.6%, compared to the oil sector which fell 3.1%, giving up some of its strong monthly gains.

Market Matters anticipates further gains in March for the local market to the 5250 area i.e. only 1.6% higher.

We remain in "sell mode"  but anticipate higher prices in most sectors before significantly reducing our equities exposure. Ideally the market will rally towards the 5300 area in early April prior to turning back down as people start thinking of "sell in May and go away!".

 

US Equities

  US equities have enjoyed 5 consecutive weeks of strong gains. This 11.7% rally has, incredibly, taken the S&P500 within 5.6% of its all-time highs.  I'm sure there are not many investors who feel like stocks are in a rampant bull market and only a few % points from all-time highs! A very different scenario from the "Doom & Gloom" headlines of January.

  Technically, the S&P500 remains bullish targeting fresh all-time highs with support now in the 1950 region. Strong resistance will be encountered 1-2% higher and after the recent strong gains some sideways price action feels very likely.

 

 Currencies and Interest Rates

  Interestingly, even after the ECB fired its ‘bazooka’ dropping interest rates along with our friends across the Tasman, yields on US 10 year bonds rose close to the psychological 2% area.

 So markets are becoming increasingly comfortable with the US economy whereas our RBA will likely not be enjoying a strong $A as it approaches 76c.  

 While Market Matters believes the RBA does not want to change interest rates in 2016, if the $A were to continue with its recent strength they may be forced to consider cutting our already low rates.

 

Resource & Bank Stocks

While the resource stocks have enjoyed excellent gains over recent weeks their momentum has definitely waned.

Market Matters believes the recent outperformance from the banking sector will continue short term now that resources have become more ‘50-50’ here.

We anticipate exiting our FMG trade from ~$2.60 early next week because the price action from miners and iron ore is not constructive.

 

Standout technical chart of the week

  The Australian Banking Sector has rallied over 12% since the panic lows last month when the press was full of the impending collapse of Australian housing prices. Technically, the local banks look set for ~ 6% further gains prior to hitting major resistance.

Market Matters will be looking to sell into this strength if it eventuates due to our large exposure to the banking sector.


Summary

As mentioned earlier, there is no major change in our view of things:

1. Market matters remains short term bullish the ASX200 targeting 5250, and then 5300, but these levels are now approaching fast.

 2. We are in "sell mode" envisaging increasing our cash position substantially over coming weeks.

 3. Ideally, banks will advance a further 5-6% so we can commence reducing our large exposure to the sector.

 4. US equities remain bullish targeting fresh all-time highs +6% but some consolidation is now overdue.

 

* Watch closely for Market Matters alerts via SMS and email.

What Matters this week

The ASX200 looks likely to open up around 55 points on Monday after a solid night on Wall Street led by the banking sector.

Potential Investing opportunities for the coming week

  • With equities rapidly approaching our sell zone we have no change to our thoughts here - be patient and look to start selling when the ASX200 hits the ~5250 area.

 

Potential Trading opportunities for the coming week

  •  Aggressive traders can look to short / sell the market around the 5250 area, probably early next week.
  •   For people still keen to buy the market, Crown (CWN) still looks poised to pop towards $14 if the $12 region can hold.

 

Portfolio / Trade Holdings

The Market Matters portfolio enjoyed another strong week led by the banking sector which advanced 3.5%.

https://www.marketmatters.com.au/blog/post/market-matters-portfolio-tuesday-8-march-2016

· Cash position now up to ~19%.


Australian ASX200

 

Chart 1 – ASX200 Weekly Chart

Chart 2 – ASX200 Daily Chart


Chart 3 - SPI (Share Price Index) Futures 60 mins Chart


Chart 4 ASX200 Financials Index (excl. REIT's) Weekly Chart



Chart 5 Volatility Index VIX Weekly Chart


Chart 6 – The US 10-year Interest Rate Monthly Chart


Chart 7 – The German 2-year Interest Rate Monthly Chart

 

American Equities

The American indices now look bullish actually targeting fresh all time highs in 2016, a break under this month's lows is required to turn this view negative.

Chart 8 – Dow Jones Index Monthly Chart


Chart 9 – Russell 3000 Weekly Chart


Chart 10 – US S&P500 Index Weekly Chart

 

Chart 11 – NYSE Composite Index Monthly Chart


Chart 12 – Russell 2000 Index Monthly Chart


Chart 13 – US NASDAQ Index Monthly Chart


Chart 14 – The Canadian Composite Index Monthly Chart



European Indices

European Indices were sparked back into life last week by Mario Draghi's (ECB) bazooka.......how long will it last?

Chart 15 – Euro Stoxx 50 Index Weekly Chart


Chart 16 – UK FTSE Index Weekly Chart


Chart 17 – Spanish IBEX Index Monthly Chart


Chart 18 – German DAX Index Monthly Chart


Asian & Emerging Markets Indices

Asian indices have regained some stability and the recent strength of other world indices. However the Emerging Markets Index looks mildly bullish targeting a further 8-10% rally from current levels if it can hold over last week's lows.

Chart 19 – Hang Seng Weekly Chart


Chart 20 – China Shanghai Composite Index Monthly Chart


Chart 21a – Emerging Markets MSCI ETF Weekly Chart

 

Chart 22 – Japanese Nikkei 225 Index Monthly Chart

Australian Stocks

Resource stocks continue to enjoy the strong counter-trend rally that we anticipated. Banks rallied strongly last week as investors went searching for "cheap" stocks.

Chart 23 – BHP Billiton (US) Monthly Chart

Chart 24 – BHP Billiton (BHP) Weekly Chart


Chart 25a – Woodside Petroleum (WPL) Monthly Chart

Chart 25b – Santos (STO) Weekly Chart

Chart 25c – Oil Search (OSH) Weekly Chart

 

Chart 26 – RIO Tinto Ltd (RIO) Weekly Chart

Chart 27 – Fortescue Metals (FMG) Weekly Chart

Chart 28 – Newcrest Mining (NCM) Monthly Chart

Chart 29 – Regis Resources (RRL) Weekly Chart

Chart 30 – Northern Star Resources (NST) Weekly Chart

 

Chart 31 – Market Vectors Gold ETF Daily Chart

 

Chart 32a – Commonwealth Bank (CBA) Quarterly Chart

Chart 32b – Commonwealth Bank (CBA) Monthly Chart

Chart 33 – ANZ Bank (ANZ) Monthly Chart

Chart 34 – Westpac Bank (WBC) Weekly Chart

Chart 35 – National Australia Bank (NAB) Weekly Chart

Chart 36 – Macquarie Group (MQG) Monthly Chart

Chart 37a – Bank of Queensland (BOQ) Monthly Chart


Chart 37b – Bendigo & Adelaide Bank (BEN) Monthly Chart


Chart 38a – AMP Ltd (AMP) Weekly Chart


Chart 38b – Henderson Group (HGG) Daily 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 (QBE) Monthly Chart


Chart 43 – Wesfarmers Ltd (WES) Weekly Chart

Chart 44 – Woolworths Ltd (WOW) Quarterly Chart


Chart 45a – Seek Ltd (SEK) Monthly Chart

Chart 45b – REA Group Quarterly Chart

 

Chart 46 – Telstra Corp. (TLS) Monthly Chart

Chart 47 – Vocus Communications (VOC) Weekly Chart

Chart 48 – 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– Healthscope (HSO) Weekly Chart


Chart 53 - Ansell (ANN) Monthly Chart

 

Chart 54 – Amcor Ltd (AMC) Monthly

Chart 55 – Crown Resorts (CWN) Monthly

Chart 56– Myer Holdings (MYR) Weekly

Chart 57– JB Hifi (JBH) Monthly

Chart 58– Harvey Norman (HVN) Monthly



Chart 59a– Australian Dollar (AUD) Monthly Chart

The $A continues to decline with major technical support down ~60c, the bounce to +74c that we mentioned over recent weeks has materialised.

Chart 59b– The $US Index Monthly Chart

 


Commodities

Gold has recently rallied very well from multi year lows but may need further poor news from equities to kick much higher.

Copper remains in a downtrend on a longer term basis which is a very similar chart pattern to Newcrest Mining (NCM) and, unfortunately, we have all seen what happened there.

Crude Oil has held the $US30/barrel area recently and staged a good 30% rally but major resistance ~US40/barrel is now very close at hand.

Iron Ore exploded last week achieving our $US60/tonne target, we are now neutral.

Chart 60 – Gold Monthly Chart

Chart 61 – Copper Monthly Chart

Chart 62 – Crude Oil Monthly Chart

Chart 63 – Iron Ore Monthly Chart

 

This report contains factual information and does not constitute financial advice. The information is not intended to imply any recommendation or opinion about any financial product.

Have a great week, from Richard and the Market Matters team


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