ALGO Buy Signal In Medibank

The ALGO  engine triggered a buy signal on yesterday’s close for MPL at $2.72.

Internal momentum indicators are showing an oversold condition, which doesn’t rule out a test of the January lows near $2.60.

As a defensive name in an increasingly uncertain market, we suggest buying shares of MPL and using a derivative overlay strategy to  enhance the returns.

We still see limited revenue growth and material resistance in the $3.00 area. However, with the 4% dividend yield and income from the option premium, we see the stock as positive income contributor to client portfolios.

Medibank

 

 

 

Banks Sell-Off – Where’s Support

We’ve been net sellers of the banks and we continue to remain cautious. The probability of discounted rights issues, increasing bad debts, reduction of dividends and little or no revenue growth, hardly makes for a  compelling investment case.

However, the chance of the washout being completed in one continued move lower, is low. Normally, we’d expect to see value investors step in at some point and create a more structured decline, with reasonable rallies within the broader downtrend.

With the above in mind, I’ve looked at the MVB Bank ETF and based on a 50% retracement, we’re now within 5% of the likely support area. Any bounce will be moderate and investors should again look to sell the rally.

Our Algo Engine will continue tracking the entry signals.

Chart – MVB

 

 

Wesfarmers – Yield Support

Wesfarmers will be providing a strategy briefing day on the 7th of June, it’s possible commentary from the presentation will add buy-side support to the stock price.

Our FY18 forecast revenue is $72b, EBIT $4.8b, EPS $2.82 & DPS $2.44, placing the stock on a forward yield of 5.7%.

Over the past 3 years any pullback in the share price to the $40- $42 range has provided a good entry level. Resistance or selling has occurred at or near $45.

Chart – WES

 

 

 

Solid Gains For Gold

After posting a low on May 9th at $1215.00, Gold touched a high $1270.00 in late NY trade on Friday. Internal momentum indicators are looking constructive for a move back to the April high of $1295.00

For investors looking to profit from a higher gold price, we suggest buying shares of NCM, EVN, or the BetaShare Gold ETF with the symbol: QUA. 

We have a medium-term target for NCM at $25.50, $3.00 for EVN and $14.00 for QUA.  Newcrest Mining

Evolution Mining

 

BetaShare Gold ETF

IPL – Algo buy Signal

Our Algo Engine triggered a buy signal in IPL on the 23rd of May at $3.45.

The price action looks to have found support, at or near $3.50 and adding a long position with stops under $3.50 is worth considering.

Chart – IPL