Stock Market Analysis: Markets Subdued As Traders Await Economic Readings

July 29th, 20140

* US stock markets finished flat for the session after paring early losses, as they consolidated recent gains thanks to better corporate earnings. Goldmans cut its rating on stocks to neutral for the next three months.
* European stock markets have eased again overnight, as earnings disappointed and violence escalated in the Gaza Strip and the Ukraine.
* Asian stock markets rose again yesterday, trading at new six years highs, on the back of speculation that the Chinese central bank will movie to add stimulus. Markets are expected to consolidate the gains today.
* Commodities prices eased. Gold prices rose to $US1,305, while crude-oil held below $US102. Copper edged to US3.243c.

The Australian share market finished flat on yesterday, with the ASX200 closing down -0.1% at 5577. Gold stocks recovered, while iron ore miners BHP, Rio and Fortescue all pushed higher after releasing their production figures last week.The big four banks have edged slightly higher. Stocks are attempting to consolidate recent gains this week after almost touching the 5600 level last week. The 5550 level is key near-term for the ASX200, after a subdued lead from overseas overnight.

ANZ has joined UBS in delaying the timing for an RBA hike, from the first quarter of next year to the second, as economists expect the central bank to tighten by 25 basis points in May, instead of February. Local investors are sharpening their pencils ahead of the reporting seasons which gets underway in the next couple of weeks.

The SPI 200 futures eased -0.1% to 5529, giving a subdued lead for the ASX market today, as traders the US corporate earnings season continues. The Australian dollar held at US94.0c on the back of Chinese data.

US Markets

US stock markets finished flat for the session after paring early losses, as they consolidated recent gains thanks to better corporate earnings. Goldmans cut its rating on stocks to neutral for the next three months.

The three benchmark indexes all finished flat for the session. The Dow Jones and the S&P500 held around record levels after finishing flat last week. The S&P500 is up 7.1% for the year. Seven of the ten S&P500 sectors finished higher, led by gains in the Utility sector up 1.5%, The Materials sector rose 0.3%, while the Industrials and Staples fell -0.5%.

It is a busy week for economic data, with the Fed FOMC two day meeting and the monthly NFP employment report. Last week’s benign inflation figures, are seen to give the Fed some room on when they will have to raise interest rates. Overnight Markit Economics reported US service industry PMI stayed at 61 in Jul, while US pending home sales unexpectedly fell -1.1% in June (compares to a 6% gain in May).

The US earnings seasons continues. Of the S&P500 companies that have reported 79% have beaten on profits, 65% beat on revenues, while 66% beat sales forecast. Companies have reported second quarter profits have risen 11%, the fastest growth rate in three years. Analysts expect S&P500 stocks to report profits up 45%, earnings rose 6.2% and sales up 3.3% in the June quarter, according to Bloomberg.

For the session Dow Jones closed up 0.1% at 16,982, the S&P500 closed up 0.1% at 1,978 and the NASDAQ closed down -0.1% at 4,444, while on 10-year Treasury notes edged up to 2.49%.

European Markets

European stock markets have eased again overnight, as earnings disappointed and violence escalated in the Gaza Strip and the Ukraine.

The Stoxx Europe 600 Index closed down another -0.2% for the session, after rising 0.7% last week, up for a second week. Trading volumes were down -20% below the monthly average. Across the region the automakers had the biggest declines, while the airliners provided support. Geopolitical tensions continued to weigh on sentiment, with the continuing violence in Ukraine and the breakdown of a cease-fire in Gaza over the weekend.

In earnings of the Stoxx Europe 600 that have reported 57% beat on profits and 51% beat on sales, according Bloomberg. In economic news eurozone we will see a plethora of data this week with CPI, GDP, Retail Sales and manufacturing data due for release.

The London markets retreated again overnight, as four stocks fell for every gainer. There are 27 FTSE 100 companies to report this week, including BP, Shell, Lloyds and Barclays. The German market continued lower. The earnings season is underway in Europe, but any good news is being tempered by the concerns of the geopolitics in the region and caution over the impacts if the EU limits Russia’s access to capital markets.

For the session the German DAX 30 closed down -0.5% at 9,598, the UK the FTSE 100 closed down -0.1% at 6,788, the French CAC 40 closed up 0.3% at 4,344, while the Spanish market closed down -0.1% at 10,879.

Asian Markets

Asian stock markets rose again yesterday, trading at new six years highs, on the back of speculation that the Chinese central bank will movie to add stimulus. Markets are expected to consolidate the gains today.

The MSCI Asia Pacific Index was up another 0.2%, after rising 1.4% last week, holding at its highest levels in six years. The index has recorded a tenth weekly gain in the past eleven. In earnings of the corporates that have reported on the MSCI Asia Pacific Index since the start of July, 56% have beat on earnings.

The Chinese market jumped another 3%, building on recent gains, as traders speculated the government is accelerating measures to support the housing market and ahead of corporate earnings which continues to the end of August.

Profits at industrial companies in China rose 18% in June on year, the largest jump since September (up from 8.9% in May). Last week’s Chinese manufacturing data is confirming a “soft” landing for that economy, as the Chinese leadership cut bank reserve requirements and boosted spending on infrastructure. Chinese CPI figures are due out this week and will give a read on the consumer.

The Hong Kong markets finished higher again up to its highest level since mid-April and has entered into bull market territory after rise 20% . The Japanese market recovered again, as investors digest corporate earnings.

For the session the Shenzhen Composite rose 2.8% at 2,323, the Hong Kong Hang Seng closed up 0.9% at 24,216, and the Japanese Nikkei closed up 0.5% at 15,529, while the South Korean KOSPI closed up 0.7% at 2,048.

Commodities

The Dollar Index edged higher to 81.00 on a lower Euro, and the Aussie Dollar held at US94.0c, edging up towards from its highest level since November. Commodities prices eased.

Overnight the NYMEX WTI Crude delivery down -0.1% at $US101.70, the COMEX Copper closed up 0.1% to 3.243, the COMEX Gold closed up 0.1% at $US1,305.80.

Last week the Chinese Gold Association reported a 19% fall in gold demand from January to June, as demand for gold bars fell 62% during in the first six months of the year and gold coin demand also fell 42%.

ASX News

AZJ – The federal government has approved Indian mining giant Adani’s proposal to develop one of the world’s biggest coal mines in Queensland.

BCI – BC Iron has flagged a rise in its full year earnings, despite being hit by a slide in iron ore prices.

BLY – Boart Longyear the mining services company, says demand for its products has bottomed out, but warns analysts may be overestimating what the company will make in earnings in 2014.

HSO – Healthscope Australia’s second largest private hospital operator has gained over $200 million (of 5.2%) in value in a successful return to the share market. Its market cap is now $3.83 billion.

LEI – Leighton the construction giant has suffered a 20 per cent slide in first half profit after writedowns and restructuring costs offset an increase in revenue.

NAB – National Australia Bank has sold a piece of its British commercial real estate loans portfolio for STG625 million ($A1.14 billion).

NVT – Navitas the education provider says its full year profit fell over -30%, after writedowns to its university division overshadowed stronger revenues.

QAN – Qantas has no plans to stop flying over Iraqi airspace on its Dubai to London flights, based on its latest security assessments.

REA – REA Group the online real estate giant has acquired a large stake in a South East Asian property business for $106.3 million.

Market Summary

ASX – to open lower
US & UK/Europe – consolidated

ANZ -0.5%, NAB -0.5%, NWS -0.7%
AWC -1.2%, BHP -0.1%, RIO -0.3%, NEM 1.5%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Markets Consolidate Ahead of Busy Week For Economic Data

July 28th, 20140

* US stock markets backed off new all-time highs on Friday, as they consolidated recent gains thanks to better corporate earnings. Goldmans cut its rating on stocks to neutral for the next three months.
* European stock markets had the biggest fall in a week, as earnings disappointed and violence escalated in the Gaza Strip and the Ukraine. Stocks were weaker late in the session.
* Asian stock markets rose again Friday, trading at their highest levels in six years. Markets are expected to consolidate the gains today.
* Commodities prices eased. Gold prices rose to $US1,302, while crude-oil eased to below $US102. Copper eased to US3.241c, while iron ore hit a one month low.

The Australian share market finished flat on Friday, after having risen for a fifth straight session with the ASX200 closing down -0.1% at 5583. Gold stocks have under performed last week, while iron ore miners BHP, Rio and Fortescue all pushed higher after releasing their production figures which impressed, the big four banks have edged slightly higher. Stocks will be attempting to consolidate recent gains this week after almost touching the 5600 level. The 5550 level is key near-term for the ASX200, after a negative lead from overseas on the weekend.

Local investors are sharpening their pencils ahead of the reporting seasons which start in the next couple of weeks.

The SPI 200 futures eased -0.1% to 5530, giving a negative lead for the ASX market today, as traders continue to focus on US the corporate earnings season and M&A activity. The Australian dollar held at US94.0c on the back of last weeks Chinese data.

temp
S&P500 consolidates recent gains, thanks to the earnings season.

US Markets

US stock markets backed off new all-time highs on Friday, as they consolidated recent gains thanks to better corporate earnings. Goldmans cut its rating on stocks to neutral for the next three months.

The three benchmark indexes all finished down -0.5% for the session, as Amazon and Visa disappointed. The Dow Jones and the S&P500 backed off record levels and finished flat for the week, giving back gains from earlier in the week on the back of better corporate earnings and the benign inflation figures, which are seen to give the Fed some room on when they will have to raise interest rates. Fed Chair Janet Yellen has said that interest rates will remain low for a considerable time after the Fed completes its tapering.

The S&P500 is up 7.1% for the year. Eight of the ten S&P500 sectors finished lower, led by falls in the Consumer Discretionary -1.1%, Energy and Financials sectors down -0.6%, while the Materials sector rose 0.2%.

The US earnings seasons continues. Eleven S&P500 stocks reported Friday night and there were a total of 145 stocks to reporting last week. Stocks like Apple gained, Facebook jumped after saying sales surged over 60%, Under Armor jumped 15% on increase 2014 forecast profit, while disappointing results came from Amazon down -6% after reporting its biggest loss since 2012, CAT fell as profits fell short, D.R.Horton slumped -12% and Visa disappointed.

Of the S&P500 companies that have reported 79% have beaten on profits, 65% beat on revenues, while 66% beat sales forecast. Analysts expect S&P500 stocks to report profits up 45%, earnings rose 6.2% and sales up 3.3% in the June quarter, according to Bloomberg.

For the session Dow Jones closed down -0.4% at 16,960, the S&P500 closed down -0.5% at 1,978 and the NASDAQ closed down -0.5 at 4,449, while on 10-year Treasury notes eased to 2.47%.

European Markets

European stock markets had their biggest fall in a week, as earnings disappointed and violence escalated in the Gaza Strip and the Ukraine. Stocks were weaker late in the session on concerns that the EU is considering limiting Russia’s access to capital market.

The Stoxx Europe 600 Index closed down -0.7% for the session, but managed to close out the week up 0.7%, as bank held up across the region rising 0.7% to a three week high.

In economic news we will see a plethora of data this week with CPI, GDP, Retail Sales and manufacturing data due for release. German consumer confidence is expected to rise to its highest level since December 2006. Last week eurozone manufacturing and services PMI rose to 54 in July (up from 52.8), improving and indicating that the recovery is on a steady rise.

The German and London markets retreated on Friday, snapping three sessions of gains, as traders showed caution ahead of the weekend of geopolitics. The earnings season has begun in Europe. These markets finished flat for the week, as traders are speculated that global growth will not be impacted significantly, because of the current state of geopolitical unrest.

For the session the German DAX 30 closed down -1.5% at 9,644, the UK the FTSE 100 closed down -0.4% at 6791, the French CAC 40 closed down -1.8% at 4,330, while the Spanish market closed up 0.3% at 10,888.

Asian Markets

Asian stock markets rose again Friday, trading at their highest levels in six years as overseas markets gave a positive lead and on the back of improving Chinese data. Markets are expected to consolidate the gains today.

The MSCI Asia Pacific Index was up 1.3% for the week, holding at its highest levels in six years, on the back of Chinese manufacturing data which is confirming a “soft” landing for that economy. The index has recorded a tenth weekly gain i the past eleven. In economic news last week Chinese manufacturing data which rose to an 18 month high in July as the HSBC Flash PMI came in at 52 (up from 50.7) and reaffirming that the government is on track to meet its 7.5% 2014 growth target.

The Hong Kong markets finished higher again up to its highest level since mid-April. The Japanese market recovered, as the BoJ is calling on the government to introduce measure to improve Japanese growth, after disappointing trade figures.

The Chinese market jumped another 1%, building on recent gains, as traders speculated the government is accelerating measures to support the housing market and ahead of corporate earnings which continues to the end of August. The eleven companies that are listing last week did not have the detrimental impact on the broader market that was feared.

For the session the Shenzhen Composite rose 1.1% at 2,260, the Hong Kong Hang Seng closed up 0.3% at 24,216, and the Japanese Nikkei closed up 1.1% at 15,457, while the South Korean KOSPI closed up 0.4% at 2,033.

Commodities

The Dollar Index edged higher to 81.03 on a lower Euro, and the Aussie Dollar rose to US94.0c, edging up towards from its highest level since November. Commodities prices eased.

Overnight the NYMEX WTI Crude delivery down -0.2% at $US101.90, the COMEX Copper closed down -0.8% to 3.241, the COMEX Gold closed up 1.0% at $US1,305.20.

ASX News

BUX – Buxton Resources shares have surged nearly 40%, after it released drilling results from its Western Australian graphite project.

DLS – Drillsearch Energy the oil and gas explorer will use the record revenue generated in the last year to boost production and develop its shale assets.

GUD – GUD Holdings the household products supplier says annual profit has fallen by nearly -44%, but the company expects a better result in 2015.

IAG – Insurance Australia Group says lower than expected natural disaster costs have helped it exceed its own performance forecasts.

MQG – Macquarie Group has reported a disappointing first quarter result and delivered a relatively upbeat profit outlook for 2015.

NCM – Newcrest has beaten its annual gold and copper production targets, but warns it is facing a hit of up to $2.5 billion after reviewing its mining assets.

SIR – Sirius Resources the nickel explorer is a step closer to funding a $470 million West Australian project.

TLS – Telstra plans to send 670 Australian jobs to Asia as part of plans to expand in the region and has told staff that it will begin outsourcing roles to partners in Asia from September.

Market Summary

ASX – to open lower
US & UK/Europe – consolidated

ANZ -0.5%, NAB -0.5%, NWS -0.7%
AWC -1.2%, BHP -0.1%, RIO -0.3%, NEM 1.5%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Weekly Market Wrap: Bulls Trigger Short Covering Rally on the ASX

July 25th, 20140

Weekly Market Wrap

Traders have once again managed to climb the “wall of worry”, putting aside the concerns over escalating violence in the Middle East, the Ukraine, Portuguese banks experiencing problems with their capital adequacy provisions and downed airplanes and managing to focus on corporate earnings.

The bulls have prevailed again this week on the Aussie market, as the ASX200 almost touched the 5600 level for the first time in six and a half years. The US markets traded at all-time highs once again, on the back of better earnings, as the European markets recovered from their 200 day support, while Asian stock markets showed some life breaking above key levels.

Locally the bulls dominated again, this time managing to orchestrate a short covering rally, pushing the market to new six and a half year highs. In commodities Gold has broken down below the $US1,300 level, Iron Ore prices are at one week lows, Copper prices are pushing to four month highs, while Crude oil prices continue to ease back towards the $US100 level.

US stock markets have pushed to new all-time highs again this week, consolidating recent gains thanks to better corporate earnings and assurances that interest rates will remain low. These markets are on track for a second week of advances on the back of better corporate earnings and the benign inflation figures, which are seen to give the Fed some room on when they will have to raise interest rates. Fed Chair Janet Yellen has said that interest rates will remain low for a considerable time after the Fed completes its tapering. The S&P500 is up 7.6% for the year. The US earnings seasons continues, as focus this week has been on the momentum and Tech stocks. A total of 145 S&P500 stocks will have reported by tonight. Apple rose to 52 week highs, Airline stocks rose on the back on Delta’s earnings, Biogen jumped over 11%, Facebook and Under Armour jumped 15% all on the back of better earnings. There have been some disappointing results too from the like of Amazon down -6% after reporting its biggest loss since 2012, CAT fell as profits fell short, D.R.Horton slumped -12% weighing on the Homebuilders sector. Of the S&P500 companies that have reported 77% have beaten on profits, 65% beat on revenues, while 70% beat sales forecast. The report season continues into next week.

European stock markets have risen for a third session, thanks to better manufacturing figures from the eurozone and China, and the support of the banking sector stocks. The Stoxx Europe 600 Index is up and building on to recent gains, up 2% in the past few sessions. Across the region the banking sector was the biggest gainers as the European banks from the PIIGS economies found some support and miners have also seen buying. In economic news eurozone manufacturing and services PMI rose to 54 in July (up from 52.8), indicating that the recovery is on a steady rise, although consumer confidence unexpectedly fell in July to -8.4 (from -7.5). The EU is considering limiting Russia’s access to capital marked and tonight the PMI figures will be released. Trader sentiment has been buoyed by better earning and news of some co-operation between Russia and Ukraine over the downing of MH17 helped ease concerns. The German and London markets have risen on the back of the better PMI figures and corporate earnings. These markets are on track for gains for the week, as the geopolitical concerns eased. Traders are speculating that global growth will not be impacted significantly, because of the current state of geopolitical unrest.

Asian stock markets have been rising this week and have broken some key resistance levels, as overseas markets gave a positive lead and on the back of improving data. The MSCI Asia Pacific Index is holding at its highest levels in six years, on the back of Chinese manufacturing data which is confirming a “soft” landing for that economy. In economic news Chinese manufacturing data which rose to an 18 month high in July as the HSBC Flash PMI came in at 52 (up from 50.7) and reaffirming that the government is on track to meet its 7.5% 2014 growth target. The Chinese market has jumped nearly 2%, building on recent gains breaking above is 200 day resistance level for the first time in four months. Traders speculate the government will accelerate measures to support the housing market and ahead of corporate earnings which continues to the end of August. The eleven companies that are listing this week have not had the detrimental impact on the broader market that was feared. The Hong Kong market is trading at its highest level since mid-April. The Japanese market is consolidating, as the country’s trade deficit was larger than expected at $US8.1 billion, when exports fell -2%, while imports rose 8.4%. This data support the BoJ is calling on the government to introduce measure to improve Japanese growth.

The Australian share market is attempting to consolidate recent gains. The index gained for five straight sessions and tested the 5600 level and is looking to consolidate at a higher level for the week. The 5550 level is key near-term for the ASX200. In economic news the Q2 CPI data came in at 3% as expected, which is key for the RBA interest rate outlook. Our resources sector is consolidating recent gains, after getting a boost from the HSBC flash China PMI figures and solid company production figures.

The Australian share market recorded a six-year closing high for the third session yesterday, with the AS200 almost touching 5600. The Australian dollar last traded up at US94.4c. Gold stocks have underperformed this week, while iron ore miners BHP, Rio and Fortescue all pushed higher after releasing their production figures which impressed, the big four banks have edged slightly higher. The yield traders got another chance to top up and have pushed Telstra to new multi-year highs. The bulls remain in control, buying the dips and looking for yield, after the major banks cut their fixed interest rates.

The ASX market looks to be setting up for a retest of the recent breakout level, as markets across Europe and the US are drifting higher, thanks to improving data and corporate earnings and despite the escalation in geopolitical tensions. Local investors are sharpening their pencils ahead of the reporting seasons which start in the next couple of weeks.

In today’s Analyst’s Eye article we highlight a few takeaways from last week’s Trader Expo, outlining some Investment Themes Second Half 2014 that were on show.

XJO Chart

The ASX market has made a steady progression higher this week, even with some profit taking seen today, in the wake of equities options expiry. The index is looking to close the week at new six year highs. The key pivot level near-term is around 5550 and traders will be looking to the US earnings season for some further direction next week, while keeping a close eye on the Middle East geopolitical situation. The Aussie dollar is now at US94.4. Key levels for the ASX200 index next week are around 5520 and 5580, with 5550 the key near term pivot level.

Remain attuned to the news from overseas, particularly from the Eurozone (Geopolitics), China (PMI) and the US (Earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices. Note Goldmans has raised its S&P500 forecast target to 2050 for 2014 (up from 1900), citing rising earnings and faster economic growth.

Those investors that are looking to establish reduce the volatility in their portfolio, add some protection or to do some stock replacement, in order to either insure that they hold on to their recent gains and still get to participate in this upside move (while being protected to the downside), can still use options as the options volatility remains relatively low and warrants can be used to ramp up your dividend yields.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

Investment Themes Second Half 2014 – Part 33 of Stock Trading Tips for All Types of Market Environment

July 25th, 20140

In today’s article we highlight a few takeaways from last week’s Trader Expo (Sydney), outlining some Investment Themes Second Half 2014 that were on show.

Traders Expo

The Traders Expo was held in Sydney last weekend. It is always useful to attend these exhibitions, as you usually come away with a gem or two. This year the Expo was held at the Homebush Olympic site because the usual site is being redeveloped. The Expo was smaller than in previous years, but the usual suspects were presenting and exhibiting. This new location could have been a factor in the lower participation and attendance rate.

Investment Themes Second Half 2014

There were a number of interesting presentations and some key takeaways included the following:

ATTENDEES – We are not in a bull market on the stockmarket, if that is measured by the number of attendees. However the number of attendees at the Property EXPO outnumbered those who were at the Traders EXPO by a factor of about five to one.

SMSFs – Super funds were a dominant theme, there were discussions about getting leverage into your super fund and exposure to overseas markets.

ETFs – The popularity of ETFs (Exchange Traded Funds) is giving the retail investor the ability to access any number of markets and sectors. The size of the ETF market is still dwarfed by the funds invested in the Managed Funds business. It should be noted that when trading ETFs the investor should understand how the ETF is calculated and what it consists of.

PERFORMANCE – Investors need to hold on to their winners because in the long run approx 20-30% of your investments will produce 80% of your returns.

PLAN – Have a written Trading Plan before you enter a trade! Know when you are WRONG! Act on that knowledge and cut your losses short.

HFTs – High Frequency Trading (HFT) can work for you, so long as you have a profitable strategy, which can be used to compound your returns.

LEVERAGE – Leverage is not necessarily a bad thing, so long as you have a positive expectancy in your trading, ie. larger dollar winners than losers and consistent probability of a winning trade.

INCOME INVESTING – The income trade will remain popular so long as interest rates remain at historical lows.

HYBRIDS – Income investors should consider investing in Hybrids in order to generate a passive income stream.

ASX INDEX – Traders thrive on volatility and in the current market environment you have needed to be very specific in your stock selection. The ASX200 has range traded in the past six months, making it difficult for Index Trend traders to make money.

SECTORS – The ASX needs to the mining sector to start trending higher in order for the Aussie market to push high to new highs.

GLOBAL – On the world stage central governments are busily trying to devalue their domestic currencies and with interest rates at historical lows across the globe, economic debt is ballooning. This is true of all the economies around the world and is one of reasons that the Aussie dollar is remaining stubbornly high.

DEBT – The Global Debt bubble is likely to pop when interest rates start to rise, but as yet the ramifications of this are uncertain. However if you want to see what happens when interest rates start weighing on investments, then refer back at the 1970′s to the mid-1980’s.

MINERS – At this point in the economic cycle mining stocks, as a general rule should be traded, rather than held for the long term.

SEASONALITY – Investors should be aware of the seasonality in the markets and should tailor their investment strategy accordingly.

Next Exhibition

The next TRADERS EXPO will be held in August in Melbourne refer to www.futurewealthforum.com.au
MELBOURNE
29 – 31 AUGUST 2014
MELBOURNE CONVENTION
& EXHIBITION CENTRE

Conclusions

No matter what type of trading or investing you are doing, it is very useful to have considered at least some of the takeaways outlined above.

When considering the type of trade that best suits your portfolio consider your risk profile. We are consistently monitoring the market and have a number of trading strategies here at D2MX_Advisory that can help you swing trade or identify times when you should be looking for insurance in your portfolio of investment(s).

Contact us at 1300 610 024 or email Contact D2MX Advisory .

Michael Hevern
Investment Adviser – D2MX Trading

Also in the series Stock Trading Tips for All Types of Market Environments:

Part 1: A Simple Trend Finder Scanning Method
Part 2: Going For Gold
Part 3: Top-Down Analysis – A Valuable Approach
Part 4: The Power of Compounding
Part 5: Measuring Your Trading Performance
Part 6: Insuring Your Portfolio
Part 7: Aussie Dollar Strength and Your Portfolio
Part 8: Investing in 2013
Part 9: Investing in 2013 (continued)
Part 10: Yield Investing In 2013
Part 11: Investors, the results are in!
Part 12: Show me the money!
Part 13: Leading Indicators: Copper (1)
Part 14: Leading Indicators: Copper (2)
Part 15: Mind the Gap – Trading Risk with CFDs Versus MINI Warrants
Part 16: Simply Staying With The Trend
Part 17: Use Contingent Orders To Manage Your Trading
Part 18: The Aussie Materials Sector and Your Portfolio
Part 19 (a): Going For Gold
Part 19 (b): Going For Gold (Stocks)
Part 20: Silver Lining – Trend Identification
Part 21: Trading Your View
Part 22: Christmas Season Trading
Part 23: Stocks for the 2013 Christmas Hamper
Part 24: 2014 – Transition Trading
Part 25: Stop Losses, Slippage and Risk
Part 26: Investing For Yield
Part 27: Sell In May
Part 28: Gap Trading – The OOPS Trading Strategy
Part 29: “Sell in May (Close by July)” Strategy For Banks
Part 30: Swing Trading Tools – RSI
Part 31: Half-Time Report
Part 32: Early Trend Entry, Using New Highs

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

Stock Market Analysis: Better Manufacturing Data Helps Markets Consolidate Recent Gains

July 25th, 20140

* US stock markets has held at new all-time highs as they consolidated recent gains thanks to better corporate earnings.
* European stock markets rose for a third session, thanks to better manufacturing figures from the eurozone and China, and the support of the banking sector stocks.
* Asian stock markets rose again yesterday, trading at their highest levels in six years as overseas markets gave a positive lead and on the back of improving Chinese data. Markets consolidated the gains overnight.
* Commodities prices eased. Gold prices eased to $US1,292 cracking the $1,300 level, while crude-oil eased $US102. Copper rose to US3.266c, while iron ore hit a one month low.

The Australian sharemarket has continued higher yesterday, up for a fifth straight session with the ASX200 closing up 0.2% at 5587. The Resources sector received a boost from the HSBC flash China manufacturing purchasing managers’ index which came in better than expected at 52 in July (up from 50.7). However Newcrest disppointed yet again after the group flagged an asset impairment of up to $2.5 billion. Financials were generally higher, but Macquarie lost nearly 3%, after flagging steady profit for fiscal 2015.

Remember it is the day after equities options expiry, so expect a flurry of activity early in the day,as the index trades at new six year highs.

The SPI 200 futures rose 0.1% to 5540, giving a another positive lead for the ASX market today, as traders continue to focus on US the corporate earnings season and M&A activity. The Australian dollar jumped to US94.4c on the back to the Chinese data. The 5570 level is key near-term for the ASX200, as the markets across Europe and the US consolidated.

temp
S&P500

US Markets

US stock markets has held at new all-time highs as they consolidated recent gains thanks to better corporate earnings.

The three benchmark indexes all finished flat for the session. The Dow Jones and the S&P500 are back at record levels and are on track for a second week of advances on the back of better corporate earnings and the benign inflation figures, which are seen to give the Fed some room on when they will have to raise interest rates. Fed Chair Janet Yellen has said that interest rates will remain low for a considerable time after the Fed completes its tapering. Trading volumes were average. The S&P500 is up 7.6% for the year.

Six of the ten S&P500 sectors finished higher, led by gains in the Consumer and Financials sectors rose 0.2%, while the Industrials sector fell -0.5% (sighed down by CAT’s results) and the Healthcare sector fell -0.2%.

The US earnings seasons continues, as focus now turns to the Tech stocks. Fifty S&P500 stocks reported overnight (including the momentum stocks from the Social media and biotech sectors) and there are a total of 145 stocks to report this week. Facebook jumped after saying sales surged over 60%, Under Armor jumped 15% on increase 2014 forecast profit, while disappointing results came from Amazon down -6% after reporting its biggest loss since 2012, CAT fell as profits fell short, D.R.Horton slumped -12% weighing on the Homebuilders sector which fell -5% (its biggest drop for the year). Trader sentiment has been buoyed by better earning and news of some co-operation between Russia and Ukraine over the downing of MH17 helped ease concerns.

Of the S&P500 companies that have reported 77% have beaten on profits, 65% beat on revenues, while 70% beat sales forecast. Analysts expect S&P500 stocks to report profits up 45%, earnings rose 6.2% and sales up 3.3% in the June quarter, according to Bloomberg.

For the session Dow Jones closed down -0.1% at 17,083, the S&P500 closed up 0.1% at 1,988 and the NASDAQ closed flat at 4,472, while on 10-year Treasury notes edged up to 2.50%.

European Markets

European stock markets rose for a third session, thanks to better manufacturing figures from the eurozone and China, and the support of the banking sector stocks.

The Stoxx Europe 600 Index closed up another 0.4% for the session, building on to recent gains and is up 2% in the past few sessions). Across the region the banking sector was the biggest gainers as the European banks from the PIIGS economies found some support.

In economic news eurozone manufacturing and services PMI rose to54 in July (up from 52.8), improving and indicating that the recovery is on a steady rise, although consumer confidence unexpectedly fell in July to -8.4 (from -7.5). The EU is considering limiting Russia’s access to capital marked and tonight the PMI figures will be released.

The German and London markets rose on the back of the PMI figures and corporate earnings. The financials rose for a third session, with Barclays, RBS and HSBC all up over 1.5%. These markets are on track for gains for the week, as the geopolitical concerns eased. Traders are speculating that global growth will not be impacted significantly, because of the current state of geopolitical unrest.

For the session the German DAX 30 closed up 0.4% at 9,794, the UK the FTSE 100 closed up 0.3% at 6,821, the French CAC 40 closed up 0.8% at 4,410, while the Spanish market closed up 1.9% at 10,860.

Asian Markets

Asian stock markets rose again yesterday, trading at their highest levels in six years as overseas markets gave a positive lead and on the back of improving Chinese data. Markets consolidated the gains overnight.

The MSCI Asia Pacific Index was flat for the session, holding at its highest levels in six years, on the back of Chinese manufacturing data which is confirming a “soft” landing for that economy. Across the property develops rallied.

In economic news Chinese manufacturing data which rose to an 18 month high in July as the HSBC Flash PMI came in at 52 (up from 50.7) and reaffirming that the government is on track to meet its 7.5% 2014 growth target.

The Hong Kong markets finished higher again up to its highest level since mid-April. The Japanese market consolidated again, as the country’s trade deficit was larger than expected at $US8.1 billion, when exports fell -2%, while imports rose 8.4%. This data support the BoJ is calling on the government to introduce measure to improve Japanese growth.

The Chinese market jumped nearly 2%, building on recent gains, as traders speculated the government is accelerating measures to support the housing market and ahead of corporate earnings which continues to the end of August. The eleven companies that are listing this week have not had the detrimental impact on the broader market that was feared.

For the session the Shenzhen Composite rose 1.8% at 2,237, the Hong Kong Hang Seng closed up 0.7% at 24,141, and the Japanese Nikkei closed down -0.3% at 15,284, while the South Korean KOSPI closed down -0.1% at 2,026.

Commodities

The Dollar Index edged higher to 80.87 on a lower Euro, and the Aussie Dollar jumped to US94.4c, edging up towards from its highest level since November. Commodities prices eased.

Overnight the NYMEX WTI Crude delivery down -1.1% at $US102.10, the COMEX Copper closed up 1.9% to 3.266, the COMEX Gold closed down -1.1% at $US1,192.70.

ASX News

AGO – Atlas Iron is cutting costs and ramping up production as it offers discounts of up to 10% to Chinese customers.

DLS – Drillsearch Energy the oil and gas explorer will use the record revenue generated in the
last year to boost production and develop its shale assets.

IAG – Insurance Australia Group says lower than expected natural disaster costs have helped it exceed its own performance forecasts.

MQG – Macquarie Group has reported a disappointing first quarter result and delivered a relatively upbeat profit outlook for 2015.

NCM – Newcrest has beaten its annual gold and copper production targets, but warns it is facing a hit of up to $2.5 billion after reviewing its mining assets.

QFX – The Australian streaming provider is attracting interest from US movie and TV streaming giant Netflix, but says it has nothing material to tell investors.

TLS – Telstra plans to send 670 Australian jobs to Asia as part of plans to expand in the region and has told staff that it will begin outsourcing roles to partners in Asia from September.

Market Summary

ASX – to open higher
US & UK/Europe – consolidated

ANZ 0.1%, NAB -0.1%, NWS 1.0%
AWC -0.3%, BHP 0.7%, RIO 0.8%, NEM -1.6%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Markets Consolidate Gains

July 24th, 20140

* US stock markets edged to new all-time highs as they consolidated recent gains thanks to better corporate earnings.
* European stock markets held on to gains, after rising 1.3% in the prior session.
* Asian stock markets rose again yesterday, trading around their highest levels in six years as overseas markets gave a positive lead.
* Commodities prices eased. Gold prices eased to $US1,306, while crude-oil held above $US103. Copper rose to US3.207c.

The Australian share market recorded a six-year closing high for the third session yesterday, with the AS200 jumped 0.6% at 5576, after almost touching 5600. BHP reported production and expects to achieve a 15th straight year of record iron ore production after smashing expectations with a 20% boost to annual output in FY14, which spurred the materials sector up 0.9%. Today the focus turns to balancing their books with equity options expiry.

The SPI 200 futures rose 0.3% to 5527, giving a positive lead for the ASX market today, as traders focused on US the corporate earnings season and M&A activity. The Australian dollar eased to US93.8c. The 5580 level is key near-term for the ASX200, as the markets across Europe and the US rebounded.

US Markets

US stock markets edged to new all-time highs as they consolidated recent gains thanks to better corporate earnings.

The three benchmark indexes all finished 0.2% higher for the session. The Dow Jones and the S&P500 are back at record levels, with trading volumes improving. The S&P500 is up 7.5% for the year. Five of the ten S&P500 sectors finished higher, led by gains in the Healthcare sector up 0.8%, Material and Energy sector rose over 0.4%, while the Industrials sector fell -0.4%.

The US earnings seasons continues as focus now turns to the momentum stocks. Thirty seven S&P500 stocks reported overnight (including the momentum stocks from the Social media and biotech sectors) and there are a total of 145 stocks to report this week. Apple rose to 52 week highs, Airline stocks rose on the back on Delta’s earnings, Biogen jumped over 11% after raising forecasts, Facebook rose after topping forecasts (after market).

Of the S&P500 companies that have reported 78% have beaten on profits, 65% beat on revenues, while 70% beat sales forecast. Analysts expect S&P500 stocks to report profits up 45%, earnings rose 6.2% and sales up 3.3% in the June quarter, according to Bloomberg.

Trader sentiment was buoyed by better earning and news of some co-operation between Russia and Ukraine over the downing of MH17 helped ease concerns. In economic news the Commerce Department reported US CPI rose 0.3% in June, in line with forecasts and giving the Fed some breathing room over having to increase interest rates according to the IMF.

For the session Dow Jones closed down -0.2% at 17,086, the S&P500 closed up 0.2% at 1,987 and the NASDAQ closed rose 0.4% at 4,473, while on 10-year Treasury notes found support at 2.47%.

European Markets

European stock markets held on to gains, after rising 1.3% in the prior session. The Stoxx Europe 600 Index closed up 0.1% for the session, holding on to gains. Across the region the miners held on to gains and banks found some support.

In economic news eurozone consumer confidence unexpectedly fell in July to -8.4 (from -7.5). The EU is considering limiting Russia’s access to capital marked and tonight the PMI figures will be released.

The German and London market edged higher on the back of corporate earnings. Traders are speculating that global growth will not be impacted significantly going forward, by the current state of geopolitical unrest.

For the session the German DAX 30 closed up 0.2% at 9,753, the UK the FTSE 100 closed up 0.1% at 6,798, the French CAC 40 closed up 0.2% at 4,376, while the Spanish market closed up 0.1% at 10,659.

Asian Markets

Asian stock markets rose again yesterday, trading around their highest levels in six years as overseas markets gave a positive lead and interest rate hike concerns eased. Markets consolidated the gains overnight.

The MSCI Asia Pacific Index rose another 0.4% for the session, its highest levels in six years. Across the eight of the ten of the industry groups finished higher for the session, led by gains in the miners.

The Japanese market consolidated, on low trading volume, as financial services and communication sectors weighed, as the BoJ is calling on the government to introduce measure to improve Japanese growth.

The Chinese market held on gains, as traders went bargain hunting on speculation the government is accelerating measures to support the housing market and ahead of corporate earnings which continues to the end of August. There are eleven companies due to list this week. The Hong Kong markets finished higher again.

For the session the Shenzhen Composite rose 0.2% at 2,197, the Hong Kong Hang Seng closed up 0.8% at 23,791, and the Japanese Nikkei closed down -0.1% at 15,328, while the South Korean KOSPI closed down -0.1% at 2,028.

Commodities

The Dollar Index edged higher to 80.80 on a lower Euro, and the Aussie Dollar eased to US93.8c, edging towards from its highest level since November. Commodities prices eased.

Overnight the COMEX WTI Crude for AUG14 delivery up 0.7% at $US103.10, the COMEX Copper for AUG14 delivery closed down -0.1% to 3.207, the COMEX Gold for AUG14 delivery close down -0.1% at $US1,306.50.

ASX News

AZJ – Aurizon the rail freight company, hauled more coal in the last 12 months despite weaker prices for the commodity.

AZZ – Antares Energy says tensions between it and one of its major shareholders are unlikely to ease any time soon, with US-based fund Lone Star promising to maintain pressure on the company, despite losing a vote to sack the board.

BHP – BHP Billiton expects to achieve a 15th straight year of record iron ore production after smashing expectations with a 20% boost to annual output in FY14.

QAN – Qantas is reportedly considering splitting its domestic and international arms.

SGM – Sims Metal Management the scrap metal and electronics recycler, is looking to more than quadruple its earnings within five years as it moves to turn around a series of disappointing financial results.

Market Summary

ASX – to open higher
US & UK/Europe – consolidated

ANZ 0.7%, NAB 0.8%, NWS 0.2%
AWC 4.8%, BHP 0.1%, RIO 0.8%, NEM -0.9%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Traders See Corporate Earnings Trump Geopolitics Again

July 23rd, 20140

* US stock markets surged on the open and held on to those gains through to the close, as once again geopolitics took a back seat to the news of better US corporate earnings.
* European stock markets rebounded overnight, snapping a three session losing streak, as traders set aside their concerns over the downed Malaysian flight and the Ukraine and escalating conflict in the Gaza Strip, focusing on earnings and M&A.
* Asian stock markets rose again yesterday, trading around their highest levels in six years and the overseas market have given a positive lead for today.
* Commodities prices eased. Gold prices eased to $US1,308, while crude-oil held above $US104. Copper rose to US3.204c.

The Australian sharemarket closed slightly higher again yesterday, with the ASX200 up 0.1% at 5543 in light trading. The Materials and utilites sectors rose around 0.4% for the session offsetting the losses in the Consumer Staples sector down -0.5% which were the worst performing for the day, while Financials were mixed. Highlights included Western Areas up 4% on the back of the release of its June quarter production report, while LNG surged another 10%. Uranium stocks have had a good move in recent sessions.

Today the focus turns to Q2 CPI data expected to come in at 3%, which is key for the RBA interest rate outlook. BHP report production figures today and should shed some light on iron ore and coal supply and margins.

The SPI 200 futures rose 0.2% to 5512, giving a positive lead for the ASX market today, as geopolitical concerns again took a back seat to the US the corporate earnings season and M&A activity continues. The Australian dollar rose to US93.9c. The 5560 level is key near-term for the ASX200, as the markets across Europe and the US rebounded.

US Markets

US stock markets surged on the open and held on to those gains through to the close, as once again geopolitics took a back seat to the news of better US corporate earnings.

The three benchmark indexes all finished 0.5% higher for the session. The Dow Jones and the S&P500 are back at record levels, with trading volumes improving. The S&P500 is up 7.3% for the year. Eight of the ten S&P500 sectors finished higher, led by gains in the Healthcare,Tech and Energy all up 0.8%, Discretionary, Industrials and Financials sectors all rose around 0.4%, while the Staples sector fell -0.2%.

The US earnings seasons continues as focus now turns to the industrials and tech majors this week. Thirty six S&P500 stocks reported overnight (including Coke, McDonald’s, Apple and Microsoft) and there are a total of 145 stocks to report this week. Of the S&P500 companies that have reported 76% have beaten on profits, while 70% beat sales forecast. Analysts expect S&P500 stocks to report profits up 45%, earnings rose 6.2% and sales up 3.3% in the June quarter, according to Bloomberg.

In economic news the Commerce Department reported US CPI rose 0.3% in June, in line with forecasts and giving the Fed some breathing room over having to increase interest rates. Existing home sales rose in June to their highest level in eight months.

For the session Dow Jones closed up 0.4% at 17,113, the S&P500 closed up 0.5% at 1,983 and the NASDAQ closed rose 0.7% at 4,456, while on 10-year Treasury notes found support at 2.46%.

European Markets

European stock markets rebounded overnight, snapping a three session losing streak, as traders set aside their concerns over the downed Malaysian flight and the Ukraine and escalating conflict in the Gaza Strip, focusing on earnings and M&A.

The Stoxx Europe 600 Index closed up 1.3% for the session, recouping most of the losses of the past few sessions. Trading volumes were 20% above the monthly average. Across the region the miners jumped 2.4% for their best performance in the industry groups. The rebound of stocks overnight is symptomatic of the recent retracement being due to a lack of buying rather than panic selling over the geopolitical concerns over Gaza and the Ukraine.

Traders sentiment have accepted the news of the imposition of Russian sanctions from the EU and the US and the calls for more stricter sanctions to be implemented and speculated that global growth will not be impacted significantly going forward.

The Russian market rose for the first time in a week. European Union foreign ministers meet to discuss whether to extend penalties against Russia amid outrage over the downing of Malaysia Airlines flight MH17 over Ukraine.

The London market rose on the back of the miners. The German market rebounded.

For the session the German DAX 30 closed up 1.3% at 9,734, the UK the FTSE 100 closed up 1.0% at 6,795, the French CAC 40 closed up 1.5% at 4,369, while the Spanish market closed up 1.6% at 10,648.

Asian Markets

Asian stock markets rose again yesterday, trading around their highest levels in six years and the overseas market have given a positive lead for today.

The MSCI Asia Pacific Index rose 0.6% for the session, its highest levels in six years. Across the region gainers outnumbers losers by two to one, as all ten of the industry groups finished higher for the session.

The Japanese market played catchup after a holiday, rising as trading volumes were up 10% above the monthly average. The BoJ is calling on the government to introduce measure to improve Japanese growth.

The Chinese market built on the gains from last week, as traders went bargain hunting, ahead of corporate earnings which continues to the end of August. There are eleven companies due to list this week. The Hong Kong markets finished higher.

For the session the Shenzhen Composite rose 1.2% at 2,192, the Hong Kong Hang Seng closed up 1.7% at 23,782, and the Japanese Nikkei closed up 0.8% at 15,343, while the South Korean KOSPI closed up 0.5% at 2,028.

Commodities

The Dollar Index edged higher to 80.78 on a lower Euro, and the Aussie Dollar held at US93.9c, edging towards from its highest level since November. Commodities prices eased.

Overnight the COMEX WTI Crude for AUG14 delivery eased -0.2% at $US104.40, the COMEX Copper for AUG14 delivery closed up 0.2% to 3.204, the COMEX Gold for AUG14 delivery close down -0.5% at $US1,308.50.

ASX News

AIO – Asciano the rail freight and ports operator Asciano has confirmed that it is in talks over a possible sale of a non-controlling interest in its terminal and logistics business.

ARI – Arrium the steel and mining group has accepted discounted prices on its iron ore shipments due to additional supply and tightening credit growth in China.

AZZ – Antares Energy the oil and gas company which is the target of a takeover bid, have met in Perth to vote on a proposal board shakeup.

KRS – Kresta Australia’s biggest blind and curtain maker, is urging shareholders to accept a $34.5 million takeover offer from China.

NCM – Newcrest Australia’s largest gold miner is preparing to fight a class action by shareholders hurt by a massive financial writedown in 2013.

OSH – Oil Search has confirmed the ramp up of a massive liquefied natural gas project in Papua New Guinea has fuelled a surge in Oil Search’s quarterly revenue, double the previous quarter.

SPL – A revolutionary condom featuring a gel that attacks sexually transmitted viruses has been given the go ahead for sale in Australia.

WSA – Western Areas says that FY14-End Cash Balance rose to $230.5M, $55M, while FY14 Cash Cost $2.50/Lb, 7.4% below guidance.

Market Summary

ASX – to open higher
US & UK/Europe – rebounded

ANZ 0.4%, NAB 0.5%, NWS -0.2%
AWC 4.1%, BHP 1.7%, RIO 1.9%, NEM 0.2%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Traders Cautious As Russia Faces Further Sanctions

July 22nd, 20140

* US stock markets rebounded from their early session losses to finish flat for the session, as once again geopolitics took a back seat to the news of better corporate earnings.
* European stock markets retraced overnight, as traders weighed their concerns over the downed Malaysian flight and the Ukraine and escalating conflict in the Gaza Strip.
* Asian stock markets rebounded yesterday following overseas leads resuming their five session winning streak, but stocks are expected to ease today, as geopolitical concerns simmer.
* Commodities prices edged higher, Gold prices rose to $US1,314, while crude-oil rose above $US104. Copper rose to US3.196c.

The Australian sharemarket closed slightly higher yesterday, with the ASX200 up 0.1% at 5539 in light trading. The Materials sector was mostly lower, Financials were mixed. Production figures are due out from BHP tomorrow.

The SPI 200 futures eased -0.1% to 5496, giving a subdued lead for the ASX market today, as geopolitical concerns simmer and the US the corporate earnings season and M&A activity continues. The Australian dollar eased to US93.7c. The 5550 level is key near-term for the ASX200, as the markets across Europe and the US eased.

temp
Crude Oil prices rise on Geopolitical concerns.

US Markets

US stock markets rebounded from their early session losses to finish flat for the session, as once again geopolitics took a back seat to the news of better corporate earnings.

The three benchmark indexes all finished -0.1% lower for the session. The Dow Jones held above the 17,000 level, while the S&P500 held on to its biggest session gain since April, but has snapped its run of trading within a 1% range which lasted 62 straight sessions. The S&P500 and the Dow Jones are still trading near all-time highs.

Nine of the ten S&P500 sectors finished in the red, led by falls in the Healthcare, Discretionary and consumer Staples sectors all down around -0.5%, the Materials and Financials sectors fell -0.3%, while the Energy sector rose 0.2% on the back of higher crude prices. The CBOE VIX jumped 6% to 12.8 after it hit its highest level since April and the biggest gain since April 2013.

The US earnings seasons continues as focus now turns to the industrials and tech majors this week. Ten S&P500 stocks reported overnight and there are a total of 145 stocks to report this week. Of the S&P500 companies that have reported 76% have beaten on profits, while 70% beat sales forecast. Analysts expect S&P500 stocks to report profits up 45%, earnings rose 6.2% and sales up 3.3% in the June quarter, according to Bloomberg.

In economic news traders were comforted by President Obama saying he favoured a diplomatic solution to the crisis in the Ukraine. The US are pushing for the EU to expand its sanctions against Russia, in a move designed to break Russia’s support for the pro-Russian rebels in the Ukraine.

For the session Dow Jones closed down -0.3% at 17,051, the S&P500 closed down -0.2% at 1,973 and the NASDAQ closed eased -0.2% at 4,424, while on 10-year Treasury notes found support at 2.47%.

European Markets

European stock markets retraced overnight, as traders weighed their concerns over the downed Malaysian flight and the Ukraine and escalating conflict in the Gaza Strip.

The Stoxx Europe 600 Index closed down -0.5% for the session, as it pared its gains of 0.8% from last week, edging towards its lowest level since mid-May. Trading volumes were down 50% on the monthly average. Across the region the automobile makers led the falls and travel and airline stocks were weaker. However stocks broadly have retraced due to a lack of buying rather than panic selling over the geopolitical concerns over Gaza and the Ukraine. Financial stocks were weaker after brokers lowered earnings forecasts for Deutsche Bank, citing operational risks in the current environment.

Traders sentiment was weighed down by the imposition of Russian sanctions from the EU and the US and the call for more stricter sanctions to be implemented at the EU meeting in Brussels tomorrow. The Russian market continued lower falling another -4%, after JP Morgan to cut the market to a sell, citing the EU and US have imposed stricter trade sanctions against Russia over the Ukrainian conflict and after the news of the downed commercial flight.

The London market eased, paring its 0.9% gain last week. The German market gave back all of the gains of the prior sessions, is trading back towards two month lows.

For the session the German DAX 30 closed down -1.1% at 9,612, the UK the FTSE 100 closed down -0.3% at 6,728, the French CAC 40 closed down -0.7% at 4,304, while the Spanish market closed down -0.4% at 10,482.

Asian Markets

Asian stock markets rebounded yesterday following overseas leads resuming their five session winning streak, but stocks are expected to ease today, as geopolitical concerns simmer.

The MSCI Asia Pacific Index edged 0.1% higher for the session. Across the region the Tech sector led the gains. The Japanese market was closed.

The Chinese market held on to Friday’s gains, as traders remain cautious ahead of corporate earnings which continues to the end of August. There are eleven companies due to list this week and there are concerns that upcoming IPOs will drain funds from the established equities. The index is down nearly -3% for the year. Last week GDP data has shown the Chinese economy has stabilised growing an annualised 7.5% in the June quarter. The Hong Kong markets finished lower.

For the session the Shenzhen Composite rose 0.1% at 2,166, the Hong Kong Hang Seng closed down -0.3% at 23,387, and the Japanese Nikkei closed at 15,215, while the South Korean KOSPI closed eased -0.1% at 2,018.

Commodities

The Dollar Index edged lower to 80.55 on a higher Euro, and the Aussie Dollar eased to US93.7c, edging back from its highest level since November. Commodities prices rose.

Overnight the COMEX WTI Crude for AUG14 delivery rose o.5% at $US104.60, the COMEX Copper for AUG14 delivery closed up 0.4% to 3.197, the COMEX Gold for AUG14 delivery close up 0.3% at $US1,314.40.

ASX News

AIO – Asciano the rail freight and ports operator Asciano has confirmed that it is in talks over a possible sale of a non-controlling interest in its terminal and logistics business.

ALZ – Australand the property developer Australand expects annual earnings to increase even if a $2.6 billion takeover offer from a Singaporean company fails.

AFI – AFI says the risk of a share market downturn is growing amid rising political unrest around the world and possible interest rate hikes, Australia’s largest listed investment fund warned after raising its annual profit.

ARI – Arrium the steel and mining group Arrium has accepted discounted prices on its iron ore shipments due to additional supply and tightening credit growth in China.

AZZ – Antares Energy the oil and gas company, says it has received an incomplete, indicative proposal to buy all of the company’s shares.

BKW – The Australian Tax Office appears to have dealt a fatal blow to a proposal to separate the cross-ownership of Brickworks and Washington H Soul Pattinson.

BLY – Standard & Poor’s has downgraded mining company Boart Longyear’s credit rating, citing ongoing poor performance.

CTX – Caltex Australia shares jumped over 4% after reporting an increase in margins.

CTY – The $209 million offered to retail veteran Solomon Lew for his stake in Country Road is significantly higher than an independent valuation of the shares.

FXJ – Australia’s richest woman Gina Rinehart appears to be mulling whether to seize control of Fairfax Media.

QFX – Nine Entertainment has become a major investor in movie and TV streaming service Quickflix.

SPL – A revolutionary condom featuring a gel that attacks sexually transmitted viruses has
been given the go ahead for sale in Australia.

Market Summary

ASX – to open flat
US & UK/Europe – eased

ANZ 1.9%, NAB 1.9%, NWS 0.9%
AWC 0.1%, BHP 0.8%, RIO 0.2%, NEM -0.1%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Corporate Earnings Compete With Geopolitics For Traders’ Focus

July 21st, 20140

* US stock markets rebounded the most in a month, as geopolitics took a back seat to the news of better corporate earnings and M&A activity.
* European stock markets recovered from its biggest fall in a week Friday night, as traders weighed their concerns over the downed Malaysian flight and the Ukraine and escalating conflict in the Gaza Strip.
* Asian stock markets continued to back away from six year highs yesterday, as markets fell for the first time in five session, on the back of geopolitical concerns.
* Commodities prices consolidate, Gold prices eased to $US1,311, while crude-oil held above $US103. Copper fell to US3.185c.

The Australian S&P ASX 200 continued to edge higher, finishing the session up 0.2% at 5531, higher for the week. In economic news last week the Carbon Tax was finally been axed as the Senate voted it down and the House has repealed the Mining Tax, but the attached spending measures remain and the Senate will debate. Production figures are due out from BHP this week.

The SPI 200 futures rose 0.4% to 5485, giving a positive lead for the ASX market today, as geopolitical concerns took a back seat to the US the corporate earnings season and M&A activity. The Australian dollar jumped to US93.9c. The 5550 level is key near-term for the ASX200, as the markets across Europe and the US rebounded.

temp
Gold safe a haven play?

US Markets

US stock markets rebounded the most in a month, as geopolitics took a back seat to the news of better corporate earnings and M&A activity.

The three benchmark indexes all finished 1% higher for the session, recouping nearly all of the fall from the prior session. The Dow Jones recovered to back above the 17,000 level, while the S&P500 snapped its run of trading within a 1% range which lasted 62 straight sessions. The Russell 200 Small Cap Index and the Nasdaq rebounded around 1.5%.

All ten S&P500 sectors finished in the green, led by gains in the Healthcare sector up 1.6%, the Financials and Tech sectors recovered 1.2%, while the Industrials and Discretionary sectors rose 0.8%. For the week the Telecom sector performed best. The CBOE VIX eased back to 12.0 after it had surged 32% (to 14.5) its highest level since April and the biggest gain since April 2013.

The US earnings seasons continues after 40% of the S&P500 financial stocks reported last week, focus now turns to the industrials and tech majors this week. Analysts expect S&P500 stocks to report profits up 45% and sales up 3.1% in the June quarter, according to Bloomberg. Nearly 100 stocks are due to report earnings in this week.

In economic news the index of US leading indicators rose for a fifth straight month in June, fuelling optimism that the US economy is gaining momentum following the severe winter. however the Thompson Reuters preliminary consumer sentiment index fell in July to 81.3 (down from 82.5).

For the session Dow Jones closed up 0.7% at 17,100, the S&P500 closed up 1.0% at 1,978 and the NASDAQ closed jumped 1.6% at 4,432, while on 10-year Treasury notes found support at 2.48%.

European Markets

European stock markets recovered from its biggest fall in a week Friday night, as traders weighed their concerns over the downed Malaysian flight and the Ukraine and escalating conflict in the Gaza Strip, as Israel moved troops and tanks into the Hamas controlled Gaza Strip,

The Stoxx Europe 600 Index was flat for the session, as it pared its gains for the week to 0.8%, as it recovered from its lowest level since mid-May. Across the region Airlines dominated the selling, but Automobile makers led the falls, after Volvo, the world’s second biggest truck maker reported profits that disappointed. The telecom sector received a boost after Ericsson the world’s largest maker of wireless networks, jumped over 8% as it reported a 4% rise in margins.

Traders sentiment was weighed down by the imposition of Russian sanctions from the EU and the US, and the news of the downing of a Malaysian commercial flight over the Ukraine killing 298 people. The capital adequacy problems with Portuguese banks also weighed on sentiment early last week, although investors are speculating this will not lead to a systemic failure in the banking system. The Portguese bank, Banco Espiito Santo plunged -8% after the S&P cut its rating to B- (from B) with a negative outlook.

The Russian market continued lower after slumping -7% in the prior session, prompting JP Morgan to cut the market to a sell, citing the EU and US have imposed stricter trade sanctions against Russia over the Ukrainian conflict and after the news of the downed commercial flight.

The London market recovered from its biggest fall in a week, paring its weekly gain to 0.9%, but it is flat for the month. The German market gave back all of the gains of the prior sessions and in a volatile week, is trading back towards the weekly lows.

For the session the German DAX 30 closed down -0.4% at 9,720, the UK the FTSE 100 closed up 0.2% at 6,749, the French CAC 40 closed up 0.4% at 4,335, while the Spanish market closed down -0.2% at 10,527.

Asian Markets

Asian stock markets continued to back away from six year highs yesterday, as markets fell for the first time in five session, on the back of geopolitical concerns.

The MSCI Asia Pacific Index eased another -0.3% for the session. Across the region all ten industry groups finished in the red. The Materials and Utilities sectors provided support earlier in the week, as commodity prices found support and iron ore prices reached seven week highs.

The Chinese market recovered from its biggest fall in a week, with concerns that upcoming IPOs will drain funds from the established equities and the government spending will be withdrawn from government vehicles. There are twelve companies that will list in this week. The index is down nearly -3% for the year. Last week data showed the Chinese economy grew 7.5% in the June quarter, the economy grew 2% in the second quarter, up from 2.4% in the March quarter.

The Hong Kong markets pared its losses for the week. The property sector had its biggest gains in nearly two months, on speculation the government will move to address the falling house prices in 55 of 70 cities from May. The Japanese market fell, as the weakness was broad based and paring its weekly gain to 0.7%.

For the session the Shenzhen Composite rose 0.3% at 2,164, the Hong Kong Hang Seng closed down -0.3% at 23,454, and the Japanese Nikkei closed down -1.1% at 15,215, while the South Korean KOSPI closed eased -0.1% at 2,019.

Commodities

The Dollar Index edged lower to 80.52 on a higher Euro, and the Aussie Dollar jumped to US93.9c, edging back from its highest level since November. Commodities prices consolidate.

Overnight the COMEX WTI Crude for AUG14 delivery eased -0.1% at $US103.10, the COMEX Copper for AUG14 delivery closed down -1.1% to 3.185, the COMEX Gold for AUG14 delivery close down -0.6% at $US1,311.00.

ASX News

AIO – Asciano the rail freight and ports operator Asciano has confirmed that it is in talks over a possible sale of a non-controlling interest in its terminal and logistics business.

AGK – AGL has record a $561 million full year profit which is in line.

CTX – Caltex Australia has signed a $200 million deal to supply diesel fuel to Gina Rinehart’s Roy Hill iron ore mine project.

DJS – David Jones is in a trading halt, pending a court action over Woolworths (SA) takeover bid.

FMG – Fortescue has reported production and sales figures which were in line with what the company reported last week.

ILU – Iluka the mineral sands miner has suffered a 10% fall in revenue during the first half of 2014, as a fall in prices offsets increased production.

KAR – Karoon Gas the gas explorer has discovered gas in the Bowen Basin off the WA coast.

STO – Santos the energy producer has reported a 25% increase in revenue, thanks chiefly to the early start of production on the massive PNG LNG project.

SYD – Sydney Airport has delivered solid growth in 1H14 with international passengers up 4.7% and total passengers up 2.3%. The strong international result

WPL – Woodside has raised its annual production target after recording a double digit rise in second quarter sales and production.

RIO – Rio Tinto has raised its quarterly iron ore production and sales by 11% and 23%, respectively, in line with market estimates.

SIR – Sirius Resources share surged last week, after it announced it has found more nickel in WA.

Market Summary

ASX – to open higher
US & UK/Europe – higher

ANZ 1.9%, NAB 1.9%, NWS 0.9%
AWC 0.1%, BHP 0.8%, RIO 0.2%, NEM -0.1%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Weekly Market Wrap: Bulls Still Successfully “Buying Dips” In The Face Of Geopolitical Unrest

July 18th, 20140

Weekly Market Wrap

The bulls have prevailed again this week on the Aussie market, as the ASX200 successfully bounced off the 5490 level a number of times. The US markets traded at all-time highs again, as the European markets eased back, in the face of geopolitical unrest, while Asian stock markets have traded sideways. Overnight traders stepped aside as geopolitical concerns escalated in the Middle East and Ukraine and as Portuguese banks experience problems with their capital adequacy provisions, which has pushed European market down to levels not seen since April. However locally, the bulls have once again “bought the dips”, after we experienced some of the widest volatility in weeks. The Aussie market continues to trade at the top end of its monthly trading range for the year, having tested six year highs again.

US stock markets fell the most in nearly three months overnight, as geopolitics swamped the news of better corporate earnings and M&A activity. The Dow Jones cracked below the 17,000 level, while the S&P500 snapped its run of trading within a 1% range which lasted 62 straight sessions. The Russell 200 and the Nasdaq slumped around -1.4%. Fed Chair Janet Yellen spoke to Congress this week, reaffirming that the US economy still requires stimulus, saying a “high degree” of monetary policy accommodation remains appropriate. Investors are still digesting the FOMC meeting minutes that suggested “valuation metrics in some sectors appear substantially stretched-particularly for smaller firms in the social media and biotech industries, despite notable downturn in equity prices for such firms early in the year”.

The US earnings season is underway and 40% of the S&P500 financial stocks will have reported by the tonight. Some of the S&P500 companies that have reported included: Intel jumped after reporting better than expected, seeing signs of improvements in the PC refresh cycle, IBM after announcing a deal with Apple in the Enterprise Apps space, disappointed after reporting weaker revenues and a fall in sales for a ninth straight time, SanDisk posted weaker earnings, JP Morgan jumped after 2Q profits beat estimates and Goldman Sachs rose after they surprised with an increase in 2Q profits, while J&J fell after they boosted estimates for the second quarter in a row, Time Warner surged 17% after FOX made a takeover bid (which was rejected). Analysts expect S&P500 stocks to report profits up 4.7% and sales up 3.1% in the June quarter, according to Bloomberg. Over 100 stocks are due to report earnings in the next seven days.

European stock markets fell the most in a week overnight, as traders turned to risk off. News included Israel military action in the Gaza Strip, the imposition of Russian sanctions from the EU and the US, and the downing of a Malaysian commercial flight over the Ukraine. The Stoxx Europe 600 Index fell -0.9% for the session, heading back to its lowest level since mid-May. The market is down -0.6% this month due to the capital adequacy problems with Portuguese banks. The London market has fallen the most in a month, trading near April lows, due to rising inflation (1.9% in June), which along with economic growth, has raised concerns that the BoE may increase interest rates as soon as November. The German market, the biggest in the EU is also trading near its May lows, in a volatile week. Commodity prices have found some support boosting mining stocks and M&A activity increased. Investors are also speculating that the ECB could extend their plans for offering cheap money to the eurozone’s lender.

Asian stock markets have traded sideways in a volatile week. Across the region the Tech sector eased, while the Materials and Utilities sectors providing support again, as commodity prices found support, with iron ore prices reaching seven week highs. The Chinese market is trading new its highs for the week, despite concerns that upcoming IPOs will drain funds from the established equities and the government spending will be withdrawn from government vehicles. Sentiment has been supported by data showing the Chinese economy grew 7.5% in the June quarter, the economy grew 2% in the second quarter, up from 2.4% in the March quarter and Retail Sales rose 12.4% in June and industrial production rose by annual rate of 9.2% in line with expectations (up from 8.8% in May). The Japanese and Hong Kong markets are easing back from their highs for the week.

The Australian share market has pared its early session losses in four of the past five trading sessions and is trading higher for the week, as corporate earnings overshadow the global geopolitical tensions. The 5490 level is key near-term for the ASX200. In economic news the Carbon Tax has finally been axed as the Senate voted it down and the House has repealed the Mining Tax, but the attached spending measures remain and the Senate will debate. The Australian dollar last eased to US93.5c. Gold stocks have outperformed, iron ore miners Rio and Fortescue reported production figures which impressed, as gold, lithium and copper stocks all built on recent gains. The banks have been holding up as investors digest the implications of the interim Murray report, a government backed financial system inquiry which raised concerns about capital adequacy for the systemically important banks. The RBA meeting minutes revealed little change in stance, saying “the exchange rate remained high by historical standards, particularly given the declines in key commodity prices”. The yield traders got another chance to top up and have pushed Telstra to new multi-year highs.

The bulls remain in control, buying the dips and the index is again trading around six year highs. The ASX market looks to be setting up to retest of these highs, as markets across Europe and the US are drifting higher, despite the escalation in geopolitical tensions. In commodities the Crude Oil price rose back above the $US103 level, while Copper consolidated and gold bounced off the $US1,290 level, while Iron Ore prices at seven week highs.

In today’s Analyst’s Eye article we outline how you can Insure Your SMSF Super against adverse market movements. There is a old adage: Buy insurance when you can, not when you have to! By buying index PUT options to protect your Super Fund portfolio from a correction in the market, you can take advantage of the cheap option premiums currently available.

XJO Chart

The ASX market has been volatile again this week, as the index bounced off weekly lows and looks to be closing the week at the upper end of its trading range. The key pivot level near-term is around 5500 and traders will be looking to the US earnings season for some further direction next week, while keeping a close eye on the Middle East geopolitical situation. The Aussie dollar is now at US93.4. Key levels for the ASX200 index next week are around 5470 and 5560, with 5500 the key near term pivot level.

Remain attuned to the news from overseas, particularly from the Eurozone (Geopolitics), China (stimulus) and the US (Earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices. Note Goldmans has raised its S&P500 forecast target to 2050 for 2014 (up from 1900), citing rising earnings and faster economic growth.

Those investors that are looking to establish reduce the volatility in their portfolio, add some protection or to do some stock replacement, in order to either insure that they hold on to their recent gains and still get to participate in this upside move (while being protected to the downside), can still use options as the options volatility remains relatively low and warrants can be used to ramp up your dividend yields.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.