18 August 19
Market Matters Weekend Report Sunday 18th August 2019
18 August 19
Market Matters Weekend Report Sunday 18th August 2019
16 August 19
Phew - a big week comes to a close (TLS, OML, COH, NCM, SGR, HLS)
16 August 19
5 stocks we are considering into the current market panic & a word on recent performance (BIN, ALL, MQG, OZL, APX)
15 August 19
Not a good day to miss earnings expectations – market falls 2.85% (TLS, BKL, TWE, SUL, WPL, WHC, ORA, CWY)
15 August 19
Should we buy more gold stocks as volatility increases? - (CSL, EVN, GDX, MFG, NCM, NST, PGH, RSG, SAR)
14 August 19
A mixed day on the reporting front (PGH, CSL, NAB, TAH)
14 August 19
Income Report: Are we finding income opportunities amongst Hybrids? (NAB, TAH)
14 August 19
Overseas Wednesday – International Equities & ETF Portfolios (MFG, COH, CYB, BABA US, 700 HK, 2318 HK, SH US, TYU9, GOVT US)
13 August 19
Magellan to raise capital for future growth after reporting strong result (MFG, CGF)
13 August 19
Keep your fingers on the pulse, there’s lots going on (JBH)
The ASX200 had a mixed week finally gaining +0.5% with strong support from the large cap miners while the broader market felt relatively heavy e.g. BHP +5.5%, RIO +8.7% and Fortescue (FMG) +7.9%. The “weak end of town” was dominated by the interest rate sensitive stocks, a trend we believe is likely to have much further to evolve i.e. Real Estate and Transport sectors down -1.7% and -2.5% respectively.
The local market has largely failed to embrace recent optimism in US markets as sector rotation remains the key thematic on the Australian bourse – stocks / sectors are swinging in & out of favour on an almost weekly basis. On Friday the ASX200 closed unchanged to the exact point for the financial year to-date, nevertheless we’ve witnessed enormous swings from many household names and popular stocks alike, we’ve only shown 5 examples below but there are many more:
Even taking APT into account buying quality names when they correct ~15-20% and selling when they rally to the same degree has proved a simple but successful formula in most cases this year.
The volatility our market is experiencing “under the hood” is not synonymous with a healthy index but Fridays close less than 3% below its decade high hasn’t yet shown any signs of a market which should be ditched on mass.
The combination of last weekend’s report evaluating the 11 sectors in the ASX200 and the above 5 stock examples reiterates a point MM has made a number times over recent months – the field is set for the “active investor”. MM describes itself as such and when we look in the mirror on this beautiful sunny morning in Sydney the main criticism we have of ourselves over last week was not accumulating additional resource stocks into weakness – catching the falling knife is always hard but that’s why MM often “scales into a position”.
For MM subscribers who read the Australian Financial Review (AFR), or who want to consider a month’s free trial, the below article supports our opinion. It’s a good simple read that dovetails with a number of our thoughts / strategies moving forward.
The ASX200 continues to consolidate its 7-day aggressive decline which started on the last day of August, the 10-day slow grind higher is usually a sign that the next swing will be with the short-term trend i.e. down. In hindsight one of the mains reason we’ve been patient with deploying our reasonable cash levels has been our opinion that a break under 6000 was likely in the coming weeks but as we saw with a number of stocks / sectors last week autonomy is the main game in town.
On Friday night markets were relatively quiet with the US tech based NASDAQ slipping -0.5%, the UK FTSE rallying +1.7% as BREXIT concerns sent the Pound tumbling down -1.5%, while copper rallied over 4% for its largest daily gain in ~5-years – overall it all felt net bullish for local stocks BUT the SPI futures are pointing to a ~25-point decline early on Monday morning.
ASX200 Index Chart
The Bank of America Fund Manager survey for September showed some extreme readings but no great surprises:
Our take from the survey results:
MSCI World stock market Index Chart
US S&P500 v emerging markets Chart
1 International equities
As we said a few weeks ago global stock markets have been moving in different directions with the underlying theme being the US outperforms everybody else – the above fund manager survey explains the “money flow” behind this phenomenon and when combined with the huge volume of company share buy backs it’s easy to see why US stocks have been big outperformers.
Ever since Donald Trump entered the Whitehouse US stocks have continued to hiccup occasionally on news and then rapidly shrug it off, whether large or small. Whatever your political leanings it’s impossible to ignore the 40% rally by the S&P500 since election day back in April 2016, stock markets clearly love lower corporate tax and a reduction in the costly regulatory environment. Something our own Government has failed the deliver.
However what’s now important is what comes next and at MM we believe there’s some exciting volatility close to hand, especially as its just rolled across my screen that “China have cancelled trade talks with the US and wont send a delegation to Washington” – Blomberg News Saturday 12.52pm AEST. Following strong market optimism at the end of last week around US – China trade this may be the catalyst we’ve been waiting for to end the ASX200 back below the psychological 6000 area.
Interestingly in the AFR article I referred to early on active investing UBS state that “ there was a strong relationship between short-term interest rates as measured by the Federal Funds Rate and the VIX, a market measure of volatility.” They mentioned an approx. 2-year lag before rising interest rates in the US led to increased volatility (usually means sharp pullbacks) and that dangerous time frame is essentially now.
Turning our attention back to US equities and following last weeks rally to yet new fresh all-time highs we have to first question whether a “melt up” is in the offing, our current belief is a definite no for 3 reasons:
Until further notice we believe US stock will follow the below swings:
Its important to understand we are not trying to be “crystal ball readers” at MM just simply being prepared for eventualities if / when they unfold.
US Russell 2000 Chart
S Dow Jones Chart
2 Should we chase the resources / materials stocks into current strength?
Last week we saw a sharp snap back into favour for the resources sector, gains were led by RIO which gained +8.7% following its announcement of a $4.4bn capital return via buybacks.
This weekend news of China cancelling trade talks with the US feels likely to create some renewed weakness in the sector which we believe is a buying opportunity, obviously China / US press releases are going to determine how deep such a correction will become.
BHP also enjoyed strong gains last week rallying a healthy +5.5% in anticipation of similar capital returns to RIO. Although last week’s rally addressed part of the imbalance we still prefer RIO over BHP at current prices.
RIO Tinto (RIO) Chart
Moving onto other names in the sector, we are likely to be more pedantic on entry levels if / when we add to our RIO Tinto (RIO) position. We most certainly cannot fully discount the risks of a US – China trade war spiralling out of control, it definitely sounds worse today than a few weeks ago.
Today we have covered 3 other stocks in the sector, on top of RIO, and the respective areas where MM is likely to put its hand to accumulate a positions.
1 Western areas (WSA) $2.70
I actually said to a colleague on Friday that if I had been lucky enough to “snag” any WSA below $2.30 I would be grabbing the quick return above $2.70 – the bounce so far has been well over 20% in just a few days, amplified by short covering.
We like this nickel producer into weakness but unlike RIO we believe there’s a decent chance it can make fresh 2018 lows.
Western Areas (WSA) Chart
2 Fortescue Metals (FMG) $3.95
Although our last foray into FMG was ill-timed it remains MM’s most successful vehicle from an aggressive investing / trading perspective.
Similar to WSA at this stage FMG only lines up to us if we see another round of strong style selling in the sector, always a possibility with the shenanigans between Trump and China.
Fortescue Metals (FMG) Chart
3 Lithium names
The lithium sector has been on a roller-coaster ride in 2018, the likes of which are rarely seen in markets, even in the volatile resources!
Tesla have announced a 3-year deal with Chinese’s top lithium producer which looks to have been made public after our market closed on Friday. This can be interpreted in different ways but may present opportunities if it’s taken negatively.
Orocobre (ORE) Chart
Kidman Resources (KDR) Chart
3 Checking in on the US “yield curve”.
Market players continue to watch US bond yields very closely, especially to see if they invert e.g. 2-year bond yields rally above their 10-year friends. However recently the spread has moved the other way, increasing back to 0.2629% as the 10-years soared above 3% to challenge their 5-year highs.
The rally in global bond yields has been assisted by the markets dismissal of major concerns around the US-China trade war, it will be interesting if this continues next week following the latest new out of China.
We have specifically noticed the impact on the sector front in the US i.e. over the last week the S&P500 is up +0.9% but the real estate and utilities sectors are down -1.3% and -2.3% respectively.
US 2/ 10-year yield curve Chart
Our macro view has not changed over the last 12-momths i.e. inflation / interest rates will rise moving forward, historically a solid back drop for the following sectors financials, energy, consumer staples and resources / materials.
As the market evolves subscribers will be kept informed of the stocks in our cross-hairs as we strive to continually tweak our portfolios to best suit the continually evolving macro-economic landscape.
A quick snapshot today is as follows:
Financials – We are already fully exposed to the sector unless we see a sharp sell off.
Energy – Woodside (WPL) or Oil Search (OSH) into 2/3% weakness and Origin (ORG) around $7.25.
Consumer Staples – tricky because many of these stocks are also high growth names that we are generally avoiding. Costa Group (CGC) under $6 is interesting i.e. ~10% lower. Also Bellamy’s (BAL) below $8 and Coca Cola Amatil (CCL) around $8.75.
Resources / Materials – see point 2.
No real change:
Standout technical chart (s) of the week
We have been calling Origin Energy extremely well over recent months / years, the last “call” was to sell around $10, the stock then experienced a ~20% correction.
Origin Energy (ORG) Chart
Trading Opportunities on our radar
Our last “call” in this section was saying buy KDR targeting above $1.20, that was achieved just few days later!
Todays call is in 2 halves but both are bullish:
Either way the plan should be to buy any weakness in KDR & then add if it falls further.
Kidman Resources (KDR) Chart
Investing on our radar
No major change, we’ve been monitoring ALL for a few weeks and have been very close to pulling the trigger on a few occasions.
Aristocrat Leisure (ALL) Chart
Our positions as of Friday. All past activity can also be viewed on the website through this link
Weekend Chart Pack
The weekend report includes a vast number of charts covering both domestic and international markets, including stock, indices, interest rates, currencies, sectors and more. This is the engine room of our weekend analysis. We encourage subscribers to utilise this resource which is available by clicking below.
Have a great Sunday!
James & the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 22/09/2018
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The MarketMatters Report is 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 distributions 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. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters 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. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. 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.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 23rd April 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters 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 Market Matters 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.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you may initially subscribe through the complimentary trial which provides you full access to all services for the trial period. You are limited to two trials after which you must subscribe to one or more membership categories available on the website or direct with Market Matters before you can trial the service again, three months after the expiry of your second trial.
To subscribe to Market Matters services and access to the website you may go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction) or contact the team directly at Market Matters by phone or email. You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]
All cancellations of month-by-month subscriptions will be cancelled and not billed again the following month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as, but not limited to; iPads, Fitbit watches, Apple watches, Google Homes, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2018 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US and/or EU persons and by accepting these terms you confirm that you are not a US and/or EU person.