Evening Wrap: ASX 200 closes on solid footing as Wisetech, Lovisa, and big banks offset losses in gold stocks

The S&P/ASX 200 closed 46.6 points higher, up 0.56%.

We saw a solid improvement across most ASX sectors today in response to rising US stock futures. Technology, Energy, and Consumer Discretionary stocks led the way, but modest gains in banks, due to their outsized weighting in the benchmark index, added to gains. Really, only the Gold sector showed any major signs of weakness.

As usual, there's plenty to unpack, and to help make sense of it all, I have detailed technical analysis on the Nasdaq Composite, S&P/ASX 200, and Iron Ore in today's ChartWatch.

Be sure to click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all the key upcoming economic data in tonight's Evening Wrap.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 46.6 points higher at 8,407.6, 0.62% from its session low and smack–bang on its session high. In the broader-based S&P/ASX 300 (XKO) advancers beat decliners by a modest 157 to 115.

A solid day for Aussie stocks in contrast to yesterday's almost total lack of interest and impetus. US stock futures are trading higher by around 1% on the back of some Trump trade de-escalation news, so today's ASX response is arguably simply tracking this item.

But that news was in the market yesterday, too. So, why didn't we move yesterday, why did we have to wait until today? 🤔

Consider that many major US-based global fund managers would have had their algorithms turned off yesterday as they were on holiday for Memorial Day. I suggest those algorithms were switched on today, and that's why we saw a response. And it was a good response, which we'll take any way we can get!

Information Technology (XIJ) (+1.1%), Energy (XEJ) (+0.76%), and Consumer Discretionary (XDJ) (+0.66%) led the way, but it was largely ebb and flow stuff.

In the Tech, Wisetech Global (WTC) (+2.2%) was good again, but Xero (XRO) (+1.5%) and Megaport (MP1) (+1.4%) were also pretty good.

In Energy, uranium stocks took a breather after their last two days of heroics, with coal stocks Yancoal (YAL) (+1.6%), New Hope Corporation (NHC) (+1.3%), and Whitehaven Coal (WHC) (+1.1%) leading the way.

In Discretionary, Lovisa (LOV) (+4.2%) did well, and is a chart that's got my attention for a potential turnaround setup. Check tomorrow's ChartWatch ASX Scans tomorrow for more on that one.

Elsewhere, the big banks logged 0.8%-1.7% gains (Westpac Banking Corp (WBC) the best of them) with QBE Insurance (QBE) also adding over 2%. It was always going to be a decent day with this sort of clout behind the benchmark!

The Gold (XGD) sub-index (-1.0%) was the only sector that came under any real pressure today. Majors Evolution Mining (EVN) (-3.1%), Newmont (NEM) (-1.6%) and Northern Star Resources (-1.5%) were the major drags, but as is usually the case in this sector, there were still plenty of juniors popping double digit percentages on results releases.

On this point, it was particularly rewarding to see the top 3 stocks in the sector (and 3 of the top 4 in today's Biggest Gainers list), are all ChartWatch ASX Scans Uptrends lists regulars – and each has been Featured several times (i.e., highest conviction). I'm talking Dateline Resources (DTR) (+41.8%), Barton Gold (BGD) (+15.6%), and Strickland Metals (STK) (+8.3%) here.

ChartWatch

NASDAQ Composite Index

An interesting chart (click here for full size image)

The Comp was closed Monday for the Memorial Day Public Holiday. No change to previous analysis:

• This is a pullback in still-solid short and long term uptrends.

• Demand will increasingly begin to exert itself as the price draws closer to the short term downtrend ribbon, presently kicking in around 18385.

• Supply is at the 21-May (Wednesday’s) high of 19241 (it’s a super-important level, a close above it will likely nullify the supply-side and clear a path to 20205).

S&P/ASX 200 (XJO)

An interesting chart (click here for full size image)

That was actually a very solid day today. Let’s call a spade a spade. Open at low. Close at high. Total demand-side control (albeit on a smallish candle).

Short and long term uptrends remain intact and strong and building. Price action is very solid, too, showing larger motive phases (i.e., upward runs) vs very shallow stagnation phases (i.e., pullback runs). Candles remain predominantly demand-side.

Check, check, and check ✅✅✅.

These factors are consistent with demand-side control, and if we assume that both demand and supply are acting based on their respective views of the future, then the combination of these factors implies a greater probability of a continued price increase than not.

We focus probability first, profitability last (there’s a whole lot of risk management in between).

Compare this to other “punters” who are obsessed with profitability and have zero consideration of probability.

No, we believe that if we get the probability right, then the profitability will take care of itself.

And that’s all we can do as analysts. Go through our tried, tested, and trusted checklists, make our calls, calculate our risk allocation, and buy/sell appropriately…

And the rest is up to the market.

And the market is going to do whatever it’s going to do.

And there’s nothing at all we can do about it.

So, we can only do our bit and accept the result.

Rinse and repeat ♻️.

Iron Ore 62% (Front month, back-adjusted) SGX

Iron-snore...😴 (click here for full size image)

The last time we covered was in ChartWatch in the Evening Wrap on 14 May.

In that update, I noted a “significant improvement” in the short term demand-supply environment following two strong demand-side candles (i.e., long white bodies and or long downward pointing shadows) on 12- and 14-May.

Of course, the general feeling was one of trading ranges within trading ranges and a “still neutral” set of short- and long term trends at best.

I did give iron ore a decent chance, though, of giving 102.05 “a very good shake”. It turns out there was no shaking. My words were the death knell…and down it’s gone pretty much every candle since.

That last candle is live, i.e., the one probing the 96.05 point of demand. Discount it for now, but should we see a close below there, then 94.70 might hold, or else we’ll likely see a move back towards 90.70-92.70.

It’s hard to see anything really more sinister from there, nor anything spectacular to the upside, either. But hey, this was one of the few futures markets that was actually open today…so there you go! 🤷

Economy

Today

• There weren't any major data releases in our time zone today

Later this week

Tuesday

• 22:30 USA Core Durable Goods Orders April m/m (-0.1% m/m forecast vs -0.4% m/m in March)

Wednesday

• 00:00 USA CB Consumer Confidence May (87.1 forecast vs 86.0 in April)

• 11:30 AUS Consumer Price Index April m/m (+2.3% p.a. vs +2.4% p.a. in March)

Thursday

• 04:00 USA FOMC May Meeting Minutes

• 22:30 USA Prelim GDP March q/q (-0.3% q/q forecast vs -0.3% q/q in December)

Friday

• 00:00 USA Pending Home Sales April m/m (-1.0% forecast vs +6.1% in March)

• 11:30 AUS Retail Sales April m/m (+0.3% m/m vs +0.3% m/m in March)

• 11:30 AUS Building Approvals April m/m (+0.3% m/m vs +0.3% m/m in March)

• 22:30 USA Core PCE Price Index April m/m (+0.1% m/m and +2.6% p.a. vs 0.0% m/m and +2.6% p.a. in March)

Saturday

• 11:30 CHN Purchasing Managers Index (PMI) May

  • Manufacturing: 49.5 forecast vs 49.0 in April

  • Non-Manufacturing: 50.6 forecast vs 50.4 in April

Latest News

Interesting Movers

Trading higher

• +41.8% Dateline Resources (DTR) – Hidden Extensions of Gold Breccia Pipes at Colosseum, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +27.5% 4DS Memory (4DS) – Response to ASX Price Query.

• +15.6% Barton Gold (BGD) – $3m Premium Placement to Expedite Tunkillia Upgrade Drilling, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +8.3% Strickland Metals (STK) – Gradina Grows With More Thick, High-Grade Gold Intercepts, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +8.0% Eroad (ERD) – Continued positive response to 26-May Delivering on strategy with sustainable, profitable growth.

• +7.9% AMA Group (AMA) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +6.8% Capstone Copper Corp. (CSC) – No news, general strength across the broader Copper sector today.

• +6.5% Bravura Solutions (BVS) – Change of Director's Interest Notice, (Damien Leonard on market purchase of 1.43 million shares at an average price of approx. $2.147 per share), rise is consistent with prevailing long term uptrend 🔎📈

• +6.2% MTM Critical Metals (MTM) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +5.3% Australian Finance Group (AFG) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +4.9% Syrah Resources (SYR) – Clarification regarding Tesla offtake agreement, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up 🔎📈

• +4.5% Neuren Pharmaceuticals (NEU) – AGM Chair Address & CEO Presentation, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up 🔎📈

• +4.2% Lovisa (LOV) – No news, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up 🔎📈

Trading lower

• -7.3% Healius (HLS) – No news, fall is consistent with prevailing short and long term downtrends, a recent regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -6.5% Minerals 260 (MI6) – No news 🤔.

• -5.6% Nufarm (NUF) – Continued negative response to 21-May Half Yearly Report and Accounts, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -4.9% Lotus Resources (LOT) – No news, general weakness across the broader Uranium sector today.

• -4.8% Catalyst Metals (CYL) – Continued negative response to 23-May Catalyst complete $150m placement to institutional investors, general weakness across the broader Gold sector today.

• -4.6% Brightstar Resources (BTR) – No news, general weakness across the broader Gold sector today.

• -4.3% Trigg Minerals (TMG) – No news, general weakness across the broader Gold sector today.

• -3.5% REA Group (REA) – Response to speculation.

• -3.4% EBR Systems (EBR) – No news, fall is consistent with prevailing short term downtrend and long term trend is transitioning from up to down, a recent regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -3.2% Pilbara Minerals (PLS) – No news, fall is consistent with prevailing short and long term downtrends, one of the most Featured (highest conviction) stocks in ChartWatch ASX Scans Downtrends list 🔎📉

• -3.1% Evolution Mining (EVN) – No news, general weakness across the broader Gold sector today.

Broker Moves

ALS (ALQ)

• Retained at add at Morgans; Price Target: $20.50 from $17.50

• Retained at sector perform at RBC Capital Markets; Price Target: $17.50

Bendigo and Adelaide Bank (BEN)

• Retained at sell at Citi; Price Target: $9.75 from $9.75

Boss Energy (BOE)

• Retained at buy at Ord Minnett; Price Target: $6.00

Canyon Resources (CAY)

• Retained at speculative buy at Canaccord Genuity; Price Target: $0.350

Credit Clear (CCR)

• Retained at buy at Shaw and Partners; Price Target: $0.440

Duratec (DUR)

• Retained at accumulate at Ord Minnett; Price Target: $1.600 from $1.720

Elders (ELD)

• Retained at buy at Bell Potter; Price Target: $9.10

• Retained at buy at Citi; Price Target: $8.60 from $9.75

• Retained at add at Morgans; Price Target: $8.55 from $9.52

• Upgraded to overweight from market-perform at Wilsons; Price Target: $8.22 from $8.38

Fisher & Paykel Healthcare Corporation (FPH)

• Retained at equal-weight at Morgan Stanley; Price Target: NZ$36.70

Genesis Minerals (GMD)

• Retained at neutral at Citi; Price Target: $4.40 from $4.00

• Retained at hold at Shaw and Partners; Price Target: $4.00

Goodman Group (GMG)

• Retained at overweight at Morgan Stanley; Price Target: $37.50

Insurance Australia Group (IAG)

• Retained at neutral at Macquarie; Price Target: $8.70

Ingenia Communities Group (INA)

• Retained at buy at Citi; Price Target: $6.50

Lifestyle Communities (LIC)

• Upgraded to buy from neutral at Citi; Price Target: $9.00 from $9.70

• Retained at buy at Citi; Price Target: $9.00

Lotus Resources (LOT)

• Retained at speculative buy at Ord Minnett; Price Target: $0.350

Lovisa (LOV)

• Retained at sell at Citi; Price Target: $25.86

Magnetic Resources (MAU)

• Retained at buy at Shaw and Partners; Price Target: $2.53

Origin Energy (ORG)

• Retained at buy at Citi; Price Target: $11.50

• Retained at neutral at Macquarie; Price Target: $10.00

• Retained at underweight at Morgan Stanley; Price Target: $9.26

• Retained at hold at Ord Minnett; Price Target: $10.40

• Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $11.00 from $11.50

• Retained at buy at UBS; Price Target: $11.70

Paladin Energy (PDN)

• Retained at buy at Ord Minnett; Price Target: $9.50

Region Group (RGN)

• Initiated at buy at Bell Potter; Price Target: $2.65

Rio Tinto (RIO)

• Retained at equal weight at Morgan Stanley; Price Target: $119.50

Suncorp Group (SUN)

• Retained at neutral at Macquarie; Price Target: $19.20

Vulcan Energy Resources (VUL)

• Initiated at buy at Bell Potter; Price Target: $6.10

WEB Travel Group (WEB)

• Retained at underweight at Morgan Stanley; Price Target: $3.40

Wisetech Global (WTC)

• Retained at overweight at Morgan Stanley; Price Target: $140.00

• Retained at buy at UBS; Price Target: $145.00

Scans