Market Matters Report / Market Matters Weekend Report Saturday 21st November 2015

By Market Matters 21 November 15

Market Matters Weekend Report Saturday 21st November 2015

Market Matters Weekend Report  Saturday 21st November 2015

The stock market feels like the Christmas rally finally started last week!


Good afternoon everyone

Overview

Last week was very strong for the ASX200 rallying over 4%, outperforming the Dow which also managed healthy gains of 3.4%.The banks are an enormous percentage of the local market and when they rise strongly it's hard for the market not to follow - the banking index rallied an impressive 5.8%.

This is a classic change of sentiment. It's always amazing how quickly stock markets switch from "the glass is half empty" to "the glass is half full" mentality. It was only a few weeks ago that everybody hated the local banks and then, suddenly, the AFR starts running stories last week along the lines of "banks too cheap to resist". The power of the press and/ or somebody talking their own book…

In addition, it is likely the recent stability in the $A has contributed to strength of local equities with a lot of last week's buying rumoured to be from offshore funds e.g. Japan.

To the Market

Investors can stand back and take comfort from the statistic that we have been quoting recently:

“Over the last 5 years the average retracement for the ASX200 in November was 7.1% and this year we experienced 7.5%.”

Equities are now in seasonally an extremely bullish, period with the technical targets for the ASX200 being 5450 and 5700.

The number of markets that look clearly bullish over the short / medium term is exciting for the bulls for example:

Bullish - Dow / S&P500, German DAX, Hang Seng / China, Nikkei, Australian Banks, Suncorp and Ramsay Healthcare.

Bearish - The markets that remain negative short / medium term are Fortescue and Newcrest Mining plus BHP looks likely to make a fresh low short term before being able to rally but downside momentum has reduced.

Market Matters thinks that BHP will again come into favour in coming weeks most likely when least expected; in a manner similar to what we have just witnessed in the banks.

One thing that again caught our eye last week was the underperformance of some $US earners e.g. QBE -3.7%, RMD +1% and CSL +3.3 while the ASX200 was up 4%. This ties in with our belief that the next $US high will be a selling opportunity in what appears to be a departure from the ‘crowd’ - all analysts are saying the $US is going up in 2016 = beware!

Also in a week that Crude Oil struggled and closed slightly lower it was interesting to see energy stocks surge 7.4% on no clear news. In a year where the energy sector is currently down over 30% perhaps we will also experience a run in this sector into early 2016.

Market Matters thinks that BHP will again come into favour in coming weeks most likely when least expected; in a manner similar to what we have just witnessed in the banks.

Chart of the week

Bank of Queensland (BOQ) $14.41 - excellent bullish pattern targeting fresh 2015 highs likely over $15 - see chart 37a.

Summary:

Market Matters is of the view that this is the time to sit back, stay long and enjoy the ride. However we are now wearing our Seller’s Hat looking for a significant high in the markets in early 2016 so will be watching price action closely around the identified resistance areas of 5450 and 5700.

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

What Matters this week

The ASX200 looks likely to open unchanged on Monday with weakness in resource stocks likely to offset strength elsewhere.

 

Potential Investing opportunities for the coming week

  •  Market Matters advocates caution investing further cash at present.

 

Potential Trading for the coming week

  • Short term any "abc" style retracements in the ASX200 should be treated as buying opportunities.
  • The main trading stock that still looks good at present is BHP if it makes fresh 2015 lows ~$19.60.

 

Portfolio / Trade Holdings


Market Matters portfolio had a great week outperforming the market with banks leading the way - the ASX200 rallied 4%.

1. Ansell (ANN) +4.6% - medium term investment.

2. ANZ Bank (ANZ) +5.4% - medium term investment.

3. Bendigo Bank (BEN) +6.3% - medium term investment.

4. Bank of Queensland (BOQ) +7.2% - medium term investment.

5. BHP Billiton (BHP) +1.3% - short term investment.

6. Commonwealth Bank (CBA) +5.4% - long term investment.

7. Seek (SEK) +4.2% - medium term investment.

8. Suncorp (SUN) +4.4% - medium term investment.

9. Oil Search (OSH) +6.1% - short / medium term trade.


· Cash for future purchases ~7.5%.

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


American Equities

The American indices experienced our anticipated correction, especially very sharply in 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 is 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 followed (by market observers and participants) S&P500 fell 2% short of the technical target during its pullback and a clear break of the current 2020 area will imply the corrective phase is not over.

· The NYSE and Russell 2000 indices are still looking average i.e. not 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


Chart 14 – The Canadian Composite 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 are outperforming the US recently as further economic stimulus is anticipated by the ECB.

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. The short term rally looks to have further to unfold.

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 are arising.

Chart 23 – BHP Billiton (US) Monthly Chart


Chart 24 – BHP Billiton (BHP) Daily Chart


Chart 25a – Woodside Petroleum (WPL) Weekly 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– Resmed (RMD) 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 an initial technical target ~67-68c.

Chart 59b– The $US Index Monthly Chart



Commodities

Gold is weak at present as it has rejected strongly the $US1200/oz resistance, short term lower prices look likely.
Copper remains very negative 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.
As anticipated, Crude Oil made fresh 2015 lows in August causing us to watch carefully for buying opportunities within the sector. Technically cautiously short term bullish from current levels.

Iron Ore remains mildly positive for a countertrend bounce towards $US65-70/tonne.

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

 

 

Reports and other documents published on this website (‘Reports’) are authored by Market Matters. The MarketMatters Reports are based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by MarketMatters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence. The author holds an interest in the financial products of ANN, ANZ, BEN, BHP, BOQ, CBA, OSH, SEK, and SUN.