Market Matters Report / Market Matters Weekend Report – Sunday 28th June 2015

By Market Matters 28 June 15

Market Matters Weekend Report – Sunday 28th June 2015

Market Matters Weekend Report – Sunday 28th June 2015

Afternoon All,

Last week we said “markets have been extremely complacent over Greece of recent weeks, could it be the one time they should be concerned?” The Greek Prime Minister has now just called a surprise referendum for 5th July to decide Greece’s decision around tough economic measures. It simply sounds like he’s scared to make the tough decisions and risk being unpopular / wrong. Giving Greece more money is unfortunately like giving a heroin addict more drugs, it does not deal with the problem. The way the Irish have turned their economy around should embarrass Greece but they probably do not even know, or care. From an investing perspective stock markets hate uncertainty and the potential for the EU to lose Greece and expose the underbelly of Italy, Spain and Portugal is not a positive scenario.

Perhaps a “Grexit” from the EU will be enough to suppress markets' belief that Central Banks can hold equities up forever – especially the US.

What investors must remember is corrections around events produce opportunities. When we buy shares in say CBA we are buying part of the CBA business not the Greek economy and decisions must be made accordingly. We remain confident at Market Matters that 2015 will be very volatile and produce opportunities. Just consider some of the moves we have witnessed in June, after May's slaughter of the banks:

Seek (SEK) -17%, Slater & Gordon (SGH) -17%, Flight Centre (FLT) -23%, South32 -19%, Fortescue -16% and China’s Index falling 20%.

I have no idea how the Greece situation will play out but I do believe that more opportunities are looming and the US will add to the fun in coming months. A trading plan and shopping list of stocks is vital going forward if this volatility continues / increases.

Also, further weakness or stability in China may lead to further selling of Australia and moving of funds to the new economic power house.

Our Views at a Glance:

1. US equities will correct 10-15% in the relatively near future.
2. There are no reasons for traders / investors to buy Australian resource stocks at present.
3. Commonwealth Bank (CBA) will trade between $75 and $95 over coming 12-18 months, hence a good yield compared to 2% official rates – very useful for option sellers.
4. I am an accumulator of any fresh lows in 2015 by Australian banks. Short term their bounce may be close to completion.
5. For the first time in over 6 months I can see Woolworths (WOW) outperforming Wesfarmers (WES) – this started to unfold aggressively last week.
6. European markets still look positive but the ASX200, led by resources, looks very vulnerable to further declines.

Clarifying potential stocks on my likely shopping List for coming months.
· Investing - ANN, ANZ, AMC, CBA, CGF, CSL, MQG, MTU, RHC, and TLS.
· Trading – Nothing at this week but likely to change soon.

Any subscribers not familiar with codes or companies can do some quick checking on the ASX website: http://www.asx.com.au/ - See charts of all below.

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 up around 15 points on Monday.


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 we are sellers of bounces in the ASX200 with stops over 5580. No decent equity opportunities at present.


 

Portfolio Holdings

Our portfolio had an excellent week, outperforming the market last week, the ASX200 fell 0.9%.

1. Bank of Queensland (BOQ) +0.16% - medium term investment.
2. Commonwealth Bank (CBA) +2.6% - long term Investment.
3. Mirvac (MGR) -2.6% - medium term investment BUT went ex-div. last week.
4. Vocus (VOC) +1.9%- 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 Indices

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 further aided by ECB stimulus but Greece remains an ongoing concern.

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 18b – German DAX Weekly Chart

Chart 19 – Greek Stock market Weekly Chart


Asian Indices
Asian indices have been very bullish in 2015, led by China as it opens its market to offshore investors, also Japan is still receiving great strength from ongoing aggressive QE. We feel the recent plunge in the Chinese Index is likely to attract some buying from overseas shortly.

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 15-20% 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 – Commonwealth Bank (CBA) Quarterly Chart

Chart 32b – Commonwealth Bank (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 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 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 - 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 59– Australian Dollar (AUD) Monthly
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. We see divergence between 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 / year.
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 our 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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The author holds an interest in the financial products of ANN, BOQ, CBA, MGR & VOC.