Market Matters Report / Market Matters Weekend Report Saturday 19 December 2015

By Market Matters 19 December 15

Market Matters Weekend Report Saturday 19 December 2015

Market Matters Weekend Report  Saturday 19 December 2015

Happy Christmas everybody!

 

Just a short report today as markets get ready for the Christmas holidays.

 Overview

 What an unusual week with the ASX200 rallying 1.5% while the Dow fell 0.8%; a rare period of local outperformance for 2015! Even after Friday night’s 367 point (2.1%) plunge on the Dow the SPI Futures are indicating the ASX200 will only open down ~40 points (0.8%).

 Notably, even with the Dow having a very rough ride on Friday the Canadian stock market, which the ASX200 is more correlated to, actually managed small gains. Hence, perhaps in a similar way to Friday our local market will again hold together in the face of adversity.

 Turning to the Markets

 Last week put two major events behind us, namely,

1. the US increasing interest rates, and

2. a trillion-dollar option expiry this morning AEST.

 Hence, with three and a half trading days left until Christmas, will we now see the classic rally? Particularly when a significant number of market players are on holidays or otherwise focussed!! Remember the December highs on the ASX200 since the GFC have been on the 31st, 23rd, 12th, 28th, 31st and 30th respectively.

 

Market Matters still feels a Christmas rally is better than a 50/50 chance especially when we consider the dates above when December highs are usually formed.

 

Remember Market Matters view for 2016 both short and longer term where short term we are looking for a high to be formed early in the new year prior to a very tough year coinciding with the end of the bull run in the USA.

 

Also the "DOT Theory" which Market Matters have quoted a few times in 2015:

 

"80% of the time the high or low of any time frame will be formed in the first 20% of that respective timeframe".

 

  • Hence if the market rallies into 2016 there is a strong possibility that the high for the year will be formed in the first quarter of 2016

  

Chart of the week

  •  Healthscope (HSO) - chart 52. HSO looks to have had a false breakdown on worries over private equity concerns; consequently, we are very bullish targeting $2.80-2.90 minimum.

 Summary

 The above ties in with Market Matters’ current roadmap where we are now in sell-mode anticipating higher levels in coming weeks where we will be looking to lighten our portfolio.

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

 

What Matters this week

The ASX200 looks likely to open down around 40 points on Monday after Friday’s 367-point rout in the Dow.

  

Potential Investing opportunities for the coming week

  •  Market Matters is looking to be a seller into any strength in coming weeks. We are not currently a buyer.

 

Potential Trading for the coming week

  •  Short term Whitehaven Coal, WHC, is an aggressive buy around $0.60 after we noticed Tony Haggarty, Non-Executive Director, recently buying stock.

  

Portfolio / Trade Holdings

 The Market Matters portfolio had a mixed week with most stocks performing well but Suncorp letting the team down - the ASX200 rallied 1.5%.

1. Ansell (ANN) -3.4% - medium term investment.

2. ANZ Bank (ANZ) +1% - medium term investment.

3. Bendigo Bank (BEN) +2.8% - medium term investment.

4. Commonwealth Bank (CBA) +3.3% - long term investment.

5. Healthscope (HSO) +6.5% - medium term investment.

6. Seek (SEK) +3.6% - medium term investment.

7. Suncorp (SUN) -12% - medium term investment.

8. Oil Search (OSH) -2.7% - short / medium term trade.

9. Mirvac (MGR) +3.1% - short / medium term investment.

  •  Cash position under ~7%

 

Australian ASX200

 

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 5a ASX200 Banking Index Monthly Chart

 Chart 5b ASX200 Financials Index (excl. REIT's) Weekly Chart 

 Chart 6 Volatility Index VIX Weekly Chart 

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

 Chart 7b – The German 10-year Interest Rate Quarterly Chart Chart 7c – The German 2-year Interest Rate Monthly Chart

 American Equities

 The American indices experienced our anticipated correction around August similar to 2011. The S&P500 has since rallied very impulsively almost making fresh all time highs, the market looks very strong at present and this remains a seasonally bullish time for equities.

  •  The Dow exceeded predicted target on pullback and now remains bullish targeting the 19,000 area.
  • The NASDAQ now looks strong and a test of 5000 is a possibility.
  • The more observed (by market observers and participants) S&P500 fell 2% short of the technical target during its pullback but is very quickly only ~2 % below all time highs.
  • The NYSE and Russell 2000 indices are still looking average i.e. not like the big NASDAQ blue-chips like Apple and Google.

 

Chart 8 – Dow Jones Index Monthly Chart

 Chart 9 – Dow Jones Index Weekly Chart

 Chart 10a – US S&P500 Index Monthly Chart

 Chart 10b – 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

 

European Indices

 Most European Indices appear to have completed a decent correction with the clearest leads recently coming from the UK's FTSE, German DAX and Spanish IBEX. The European Indices were outperforming the US recently until ECB stimulus disappointed the markets, but overall the they remain bullish.

 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

 Chart 19 – German DAX Index Weekly Chart

 Asian & Emerging Markets Indices

Asian indices have been extremely volatile over recent months in sympathy with the uncertainty in Chinese stock market and weakness / devaluation of the Yuan.

 Chart 20a – Hang Seng Weekly Chart

 Chart 20b – China Shanghai Composite Index Weekly Chart

 Chart 21a – Emerging Markets MSCI ETF Weekly Chart

 Chart 22 – Japanese Nikkei 225 Index Monthly Chart

 

Australian Stocks

Quality stocks with sustainable yield have been standouts over recent times but some industrial and finally resource stock are now looking interesting.

We remain cautiously positive the “yield play” after its +20% correction.

We're no longer bearish the resources sector from a risk / reward trading perspective and in fact some low risk buying opportunities maybe arising.

 Chart 23 – BHP Billiton (US) Monthly Chart

 Chart 24 – BHP Billiton (BHP) Daily 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 – Vale (US) Weekly Chart

 Chart 29 – Newcrest Mining (NCM) Monthly Chart

 Chart 30a – Regis Resources (RRL) Weekly Chart

Chart 30b – Northern Star Resources (NST) Weekly Chart

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

 Chart 31b – Market Vectors Gold ETF Daily Chart

 Chart 32a – Commonwealth Bank (CBA) Quarterly Chart

 Chart 32b – Commonwealth Bank (CBA) Monthly Chart

Chart 33a – ANZ Bank (ANZ) Monthly Chart

 Chart 33b – ANZ Bank (ANZ) Daily 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) Weekly Chart

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

Chart 38 – AMP Ltd (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 (QBE) 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 Corp. (TLS) Monthly Chart

 Chart 47– M2 Group Ltd (MTU) Monthly Chart

 Chart 48a – 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– 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.

Chart 59b– The $US Index Monthly Chart

 

Commodities

 Gold recovered well last week breaking the short term downtrend.

 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 $US40/barrel area recently but has not managed to rally.

 Iron Ore remains around multi-year lows and like Crude Oil has failed to achieve any meaningful bounce.

 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 our personal TECHNICAL opinion of markets and "General Advice" taking no account of individual’s circumstances.

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

 

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