Market Matters Report / Market Matters Weekend Report Sunday 3rd January 2016

By Market Matters 03 January 16

Market Matters Weekend Report Sunday 3rd January 2016

Market Matters Weekend Report Sunday 3rd January 2016

Happy New Year everybody!

 

Overview

 

 

2015 is now behind us and Market Matters believes that in 2016 we will witness some significant trend changes and hence exciting opportunities!

 Market Matters believes that what worked last year will likely not work this year so flexibility will be king; we sincerely believe that Market Matters is well positioned to help guide investors through what will likely be an eventful year.

 

 Turning to the Markets and All-In Summary

 

 Market Matters view for 2016 both short and longer term are below, a few lines BUT potentially huge implications for wealth:

 

 1.       ASX200 – Market Matters is of the view that structurally the ASX200 is likely to attempt a break of the high of last week but we remain in a sell-mode as we continue to look for opportunities to reduce our portfolio, in turn looking for better buying opportunities later in the year - see charts 1,2,3 & 4.

 

2.       S&P500 – the technical picture is so clear it is scary; we are looking for one more all-time high followed by at least a 15% correction - see charts 9 & 10a.

 

3.       Emerging Markets – still looking for 1 new low around 10% lower which is not a good sign for the resources sector and therefore Australia; BUT we believe this index will outperform the US and Europe in 2016 (a very big call we know!) - see chart 21a.

 

4.       US Dollar – the US Dollar has been in a strong bull market over recent years but we believe this trend is extremely close to terminating; in turn this could be very ugly locally for money that has poured into US dollar-earning companies and funds - see chart 59b.

 

5.       Commodities and Resource stocks – this battered sector is likely to actually improve if we see a top in the US Dollar / low in Emerging Markets so BHP, for example, might even have a decent year compared to other stocks.

 

6.       Gold – still looks set to make 1 more low as we have been advocating for some time - see Market Vectors chart 31b and Chart of the Week. Market Matters believes there will be a place for gold stocks in investors’ portfolios in 2016, the first time for many years.

 

 

Chart of the week

Market Vectors Gold Miners ETF – we will be a buyer of gold stocks into fresh lows for this market, a trade we have been watching over recent months -  chart 31b.

Our preferred stocks are Regis (RRL) and Northern Star (NST)

 

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

 

 What Matters this week

 

 The ASX200 looks likely to open down around 80 points on Monday after Fridays 170-point fall in the Dow.

 

Potential Investing opportunities for the coming week

 

·          Market Matters continues to advocate reducing portfolios into market strength as we did last week with Ansell and Seek.

         

Potential Trading for the coming week

 

·          Short term we would stand back and watch what the market is telling us, especially the ‘tone of the market’, as we enter the first part of 2016.

 

 

 Portfolio / Trade Holdings

  The Market Matters portfolio had an excellent 5 days outperforming the ASX200 with all stocks performing well  - the ASX200 rallied 3.5%.

  1.       Ansell (ANN) +2.3% - medium term investment.

 2.       ANZ Bank (ANZ) +4.7% - medium term investment.

 3.       Bendigo Bank (BEN) +4.8% - medium term investment.

 4.       Commonwealth Bank (CBA) +4.7% - long term investment.

5.       Healthscope (HSO) +3.1% - medium term investment.

 6.       Seek (SEK) +4.5% - medium term investment.

 7.       Suncorp (SUN) +4.6% - medium term investment.

 8.       Oil Search (OSH) +8.9% - short / medium term trade.

 9.       Mirvac (MGR) -1.5% - short / medium term investment - NB Traded ex-dividend.

     Cash position now  ~14%.

 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 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 18,500-19,000 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 ~4.5% 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  Chart 14 – The Canadian Composite Index Monthly Chart  European Indices

 Most European Indices have struggled over the last 4 weeks, except the FTSE, since the ECB disappointment and now look 50-50.

  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

  Stocks with sustainable yield, offshore earnings and healthcare in general have been standout sectors 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 may arise in 2016. However remember our 2016 US equities forecast.

  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 continues to fall within the short term downtrend but momentum is declining.

 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 so far 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 and here’s to an exciting 2016, from Richard and the Market Matters team


 

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