APRA fears
11.09 am The market has been driven lower by the banks as fears grow that APRA, the bank regulator, will require more capital raisings. Given the dominance of banks in our index, most stocks have been dragged lower except for some minor buying in golds and a couple of the beaten down yield plays.
It's not a great start for my book although there are a couple of bright spots with FMG up again and WOR up in a small way but looking bullish as it congests near the top of the range of the surge day.
Here's the latest chart.
Resource stocks were firm in overnight trading but AWC and IGO have slipped lower so far. I'm not too concerned at this stage.
Janus Henderson group has been slipping lower since I bought the first tranche about a dollar higher. However, I haven't changed my view on the chart and am waiting for the next leg up.
EVN has been a short hedge but I suspect the fall is over for now. There was a very minor new low yesterday at 218.5 and a rejection of that today. It's an amber light as this could reverse quickly. I've cut half my short at 223 which was the entry price and the last sale is at 225. I'll cut the rest if it starts to gather momentum.
11.44 am RBA minutes came out and seem more hawkish than anticipated although the meeting was before a softening in lending figures. This has helped to push the index temporarily below 5700 and getting close to levels where buying support tends to emerge. Probably not likely to happen today to any great extent but could be setting up for the usual two days up to follow two days down in this choppy phase we're in.
I cut the last of the EVN short at 225 for a minor loss. Trading at 226 now.
12.42 Sold half of the FMG on the early strength at 546 and felt I was possibly being too cautious. However, the stock is back to 538, BHP has drifted into the red despite overnight strength in the ADRs and RIO is 1.7% lower on a disappointing production update. I'll wait and see but this might be all I can expect for now and I may look to close out the position by the end of trade. The initial entry price was 527 and I sold half there as it seemed to stall so the trade hasn't quite gone as hoped. However, it's such a directionless market that it's ambitious to expect much more.
1.56 pm The Aussie dollar is up strongly after the RBA minutes which has stalled any continuation in the gold sector recovery. However, there is no sell off either and I'm not sure if there is any significant opportunity there. The resources are coming back and helping my book as the market recovers from an intraday low of 5679 to be down 60 points at 5695.
I'm tempted to buy DOW shares. The chart is reasonably supportive and the board of Spotless finally capitulated and recommended that shareholders accept the $1.15 per share bid from Downer who already hold more than 67%. They should get close to levels where they can move to compulsory acquisition. In the meantime, yesterday's bid for Programmed Maintenance by Japanese company Persol at a higher multiple has led to reassessment of this much derided bid. There was always a large gap between what analysts thought of the SPO bid and what the board thought and the Persol bid for a similar sort of company vindicates both DOW and the Spotless board.
The Downer chart shows the rally from a mid April low after a stock issue to a high around 660. A mild pullback has been followed by rangy action but a potential higher low is there and the stock has the potential to push up towards 720 if it holds.
3.40 pm I'm wondering, as you do, if this time the index support will fail but once again we seem to be overreacting given that regional markets are mixed and US futures are down a tiny amount. However, I am going to exit the balance of FMG and SUL which has failed to kick on and is down 21 today, 18 cents below my entry level.
I'm undecided about the banks but plan to put on a small short in BEN. There was a double top on Friday with a high at 1157 and it has rolled lower to 1123. I think it could slip to around 1100 even if it turns out to be a correction rather than a sell off. It it fails there then new lows around 1020 could be expected.
4.19 pm The ASX 200 finished lower by 1.2%, off the intraday lows but not convincingly so. I sold the last of the FMG at 536 and the SUL at 835 while adding a small short in BEN. The market is panicking about an APRA call to raise up to $30 billion in a very short time. A more pragmatic alternative is that the banks will be allowed to raise these funds slowly over a couple of years through retained earnings and dividend reinvestment plans. This is a more plausible scenario and the banks and market would probably rally on that news.
DOW performed ok, down 0.8% so better than the overall market but is still in the range. One to watch.
It's not a great start for my book although there are a couple of bright spots with FMG up again and WOR up in a small way but looking bullish as it congests near the top of the range of the surge day.
Here's the latest chart.
Resource stocks were firm in overnight trading but AWC and IGO have slipped lower so far. I'm not too concerned at this stage.
Janus Henderson group has been slipping lower since I bought the first tranche about a dollar higher. However, I haven't changed my view on the chart and am waiting for the next leg up.
11.44 am RBA minutes came out and seem more hawkish than anticipated although the meeting was before a softening in lending figures. This has helped to push the index temporarily below 5700 and getting close to levels where buying support tends to emerge. Probably not likely to happen today to any great extent but could be setting up for the usual two days up to follow two days down in this choppy phase we're in.
I cut the last of the EVN short at 225 for a minor loss. Trading at 226 now.
12.42 Sold half of the FMG on the early strength at 546 and felt I was possibly being too cautious. However, the stock is back to 538, BHP has drifted into the red despite overnight strength in the ADRs and RIO is 1.7% lower on a disappointing production update. I'll wait and see but this might be all I can expect for now and I may look to close out the position by the end of trade. The initial entry price was 527 and I sold half there as it seemed to stall so the trade hasn't quite gone as hoped. However, it's such a directionless market that it's ambitious to expect much more.
1.56 pm The Aussie dollar is up strongly after the RBA minutes which has stalled any continuation in the gold sector recovery. However, there is no sell off either and I'm not sure if there is any significant opportunity there. The resources are coming back and helping my book as the market recovers from an intraday low of 5679 to be down 60 points at 5695.
I'm tempted to buy DOW shares. The chart is reasonably supportive and the board of Spotless finally capitulated and recommended that shareholders accept the $1.15 per share bid from Downer who already hold more than 67%. They should get close to levels where they can move to compulsory acquisition. In the meantime, yesterday's bid for Programmed Maintenance by Japanese company Persol at a higher multiple has led to reassessment of this much derided bid. There was always a large gap between what analysts thought of the SPO bid and what the board thought and the Persol bid for a similar sort of company vindicates both DOW and the Spotless board.
The Downer chart shows the rally from a mid April low after a stock issue to a high around 660. A mild pullback has been followed by rangy action but a potential higher low is there and the stock has the potential to push up towards 720 if it holds.
3.40 pm I'm wondering, as you do, if this time the index support will fail but once again we seem to be overreacting given that regional markets are mixed and US futures are down a tiny amount. However, I am going to exit the balance of FMG and SUL which has failed to kick on and is down 21 today, 18 cents below my entry level.
I'm undecided about the banks but plan to put on a small short in BEN. There was a double top on Friday with a high at 1157 and it has rolled lower to 1123. I think it could slip to around 1100 even if it turns out to be a correction rather than a sell off. It it fails there then new lows around 1020 could be expected.
4.19 pm The ASX 200 finished lower by 1.2%, off the intraday lows but not convincingly so. I sold the last of the FMG at 536 and the SUL at 835 while adding a small short in BEN. The market is panicking about an APRA call to raise up to $30 billion in a very short time. A more pragmatic alternative is that the banks will be allowed to raise these funds slowly over a couple of years through retained earnings and dividend reinvestment plans. This is a more plausible scenario and the banks and market would probably rally on that news.
DOW performed ok, down 0.8% so better than the overall market but is still in the range. One to watch.
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