Our ALGO engine triggered a sell signal for Commonwealth Bank on July 9th at $76.10.
Since then the stock has lost over 3% and reached $73.50 in early trade today.
CBA is scheduled to report its FY18 result next Wednesday. The early forecast is for NPAT to print at $9.5 billion and DPS to be flat near $2.30.
There are three key reasons why we believe the earnings risk is skewed to the downside in this report.
The AUSTRAC settlement of $327 million, margin pressure from short-term funding costs and a disappointing 4% loan growth in June.
Technically, the CBA chart has followed a “lower high” pattern since since mid-January and has dropped over 10% during that time.
We continue to hold a bearish bias toward the banks, in general, and expect CBA to test the June low trade of $67.50 over the medium-term.
Todd has worked in the financial industry for 20 years. During this time, his primary focus has been in the Foreign Exchange, Global Equities and Fixed Income areas. Todd has also served as a Judicial Advocate in several tax cases in the US Federal Court.