Evening Wrap: ASX 200 dips as falling iron ore and lithium prices hobble key resources stocks, MinRes and Liontown plunge

Today's roughly flat performance on the S&P/ASX 200 was due to a combination of an earnings season hangover of news and activity, merged with a lack of US market-action overnight.

That doesn't mean we don't still have all the details on the big moves that did occur, including a massive sell off in Mineral Resources (MIN) (-8.5%) and Liontown Resources (LTR) (-8.5%) shares, as well as all the broker post-earnings assessments that are still coming through.

Also be sure to click through / scroll down to check out the return of ChartWatch – today featuring a plunging iron ore price, and an increasingly sickly looking copper price.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 6.7 points lower at 8,103.2, 0.37% from its session low and just 0.09% from its high. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a narrow 135 to 141.

There wasn't a great deal of movement in most ASX sectors today, with just the Information Technology (XIJ) (+1.2%), Consumer Staples (XSJ) (-1.9%), and Resources (XJR) (-1.4%) sectors seen moves in excess of 1%.

The best of the ASX Tech sector today.

Scratch Staples, ex-div's for Coles Group (COL) (-2.4%) and Woolworths (WOW) (-1.6%) means that move was totally innocuous.

Tech enjoyed solid gains from sector heavyweights like Wisetech (WTC) (+2.4%), Xero (XRO) (0.70%), and Technology One (TNE) (+0.70%). No major news among them – just a trio of very strong short and long term uptrends in each stock's chart. The trend appears to be the friend of these stocks.

But not the friend of far too many stocks in the Resources sector. Today it was a swathe of iron ore, base metals, and lithium stocks that endured the worst falls, as respective commodity prices weakened over the last 24 hours. Mineral Resources (MIN) and Liontown Resources (LTR) both lost 8.5%.

Another tough day for the ASX Resources sector.

ChartWatch

High Grade Copper Futures (Front month, back-adjusted) COMEX

Apathy is copper's greatest enemy now...

The last time we covered high grade copper was in ChartWatch in the Evening Wrap on 16 August.

In that update, I noted that the price action and volume likely indicated the supply-side had taken a breather, allowing the demand-side some rare control of the price. The price was tracking towards key overhead dynamic supply zones in the form of the short and long term downtrend ribbons, as well as a static point of supply at 4.224 (now 4.292 due to contract roll / price back-adjusting process).

I noted: Watch the candles closely at the potential supply points for the “fingerprints” of excess supply – black candles and or upward pointing shadows.

I consider all supply points (and demand points) to be provisional until confirmed by price action. Once confirmed, they become far more trustworthy.

Long story short, fingerprints of supply did occur at supply etc. etc. and high grade copper’s short term price action is again aligning with the long term downtrend. We’re back to falling peaks and falling troughs indicating supply reinforcement and demand removal, plus candles are black/upward pointing shadows. The supply-side is once again in control.

The trend ribbons, as well as 4.292-4.322 make up a clear and seemingly impenetrable zone of supply. Until the high grade copper price closes above it – there’s likely very little to get excited about here.

More likely, is a continued rotation to retest demand between 3.893-4.006, noting the last major point of demand at 3.989 occurred within this zone.

Volume has all but dried up indicating a decline in overall interest, and that perhaps is high grade copper’s greatest enemy for now – apathy.

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

Watch the rotation...

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 27 August.

In that update, I noted that iron ore was “far from completely out of the woods” following its fledgling rally after breaking through the critical 94-99.20 demand zone.

That rally terminated fractionally above the dynamic supply of the short term downtrend ribbon, which along with the candles (supply-side), has now realigned with the prevailing long term downtrend.

Monday’s long black candle was the straw that broke the camel’s back here, and today’s candle (still live) appears to be following through, taking out the 95.25 point of demand (for now).

A close below 95.25 likely resigns iron ore to a retest of 91.45. A close below 91.45 could be potentially catastrophic given the next major point of demand below it doesn’t kick in until the October 2023 major swing low of 73.60.

It’s something of a race against time for iron ore. The seasonal low can kick in any time between now and December and the end of year seasonal rally can be substantial. The big question for me is: Is there one more push down before it starts to clear out the last remaining bulls?

Looking at the chart above, I suggest we’re going to find out soon! I also suggest there’s likely nothing too see here for the bull case until a close above the long term downtrend ribbon – currently kicking in around 108.40-111.30.

Economy

Today

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

Later this week

Wednesday

• 00:00 USA ISM Manufacturing PMI August (47.5 forecast vs 46.8 in July)

• 11:30 AUS September Qtr GDP (+0.2% q/q forecast vs +0.1% q/q in March)

• 11:45 CHN Caixin Services PMI August (52.1 forecast vs 52.1 in July)

Thursday

• 00:00 USA JOLTS Job Openings August (8 million forecast vs 8.18 million in July)

• 12:00 AUS RBA Governor Michelle Bullock Speaks

Friday

• 00:00 USA ISM Services PMI August (50.9 forecast vs 51.4 in July)

• 22:30 USA Non-Farm Employment Change August (+164,000 forecast vs +114,000 in July) and Unemployment Rate (4.2% forecast vs 4.3% in July)

• 22:30 USA Average Hourly Earnings August (+0.3% forecast vs +0.2% in July)

Latest News

Interesting Movers

Trading higher

• +12.4% Omni Bridgeway (OBL) - Change in substantial holding from PPT (increase).

• +9.6% Cettire (CTT) - Becoming a substantial holder.

• +5.8% Kelsian Group (KLS) - Change of Director's Interest Notice (Elliott) (on market purchase of $37,500 worth of the company's stock).

• +5.2% Adairs (ADH) - No news.

• +5.1% Generation Development Group (GDG) - No news since 29 Aug FY24 Results Pack, rise is consistent with prevailing short and long term uptrends 🔎📈.

• +5.0% Nanosonics (NAN) - Ceasing to be a substantial holder (State Street is often involved in lending stock to short sellers).

• +4.5% Kogan.Com (KGN) - No news, active buyback in place.

• +4.3% Lovisa (LOV) - No news since 27 Aug FY24 Full Year Results Presentation, rise is consistent with prevailing long term uptrend, bouncing off long term uptrend ribbon 🔎📈.

• +4.1% Australian Clinical Labs (ACL) - Continued positive response to yesterday's Appointment of CFO, but also to 29 Aug FY24 financial results investor presentation, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈.

• +4.0% Regis Healthcare (REG) - No news since 26 Aug Regis Healthcare Investor Presentation FY24, rise is consistent with prevailing short and long term uptrends 🔎📈.

Trading lower

• -8.8% Imugene (IMU) - Imugene Webinar - Azer-cel Trial Update.

• -8.5% Mineral Resources (MIN) - Double whammy of big fall in iron ore price today, and big fall in lithium prices yesterday equals not much love around for old MinRes. Kinda irrelevant though, when you consider today's fall is consistent with MIN's prevailing short and long term downtrends - and that's why it has been a stalwart of ChartWatch Scans Feature Downtrends Lists for months now... 🔎📉.

• -8.5% Liontown Resources (LTR) - No news, also tagged by lithium sell-off, but just like MIN - a regular ChartWatch Scans Feature Downtrends Lists constituent, fall is consistent with prevailing short and long term downtrends 🔎📉.

• -6.5% Mayne Pharma Group (MYX) - No news, fall is consistent with prevailing long term downtrend 🔎📉.

• -6.4% Appen (APX) - No news, retained at lighten at Ord Minnett, see Broker Notes section.

• -6.2% Stanmore Resources (SMR) - Ex-dividend $0.0655 fully franked.

• -5.9% Clarity Pharmaceuticals (CU6) - No news 🤔.

• -5.7% Lycopodium (LYL) - No news 🤔.

• -5.6% Jupiter Mines (JMS) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉.

• -4.6% IGO (IGO) - Ditto lithium.

Broker Notes

• 4DMEDICAL (4DX)

  • Retained at buy at Ord Minnett; Price Target: $1.05 from $1.20

• Australian Finance Group (AFG)

  • Retained at neutral at Citi; Price Target: $1.65 from $1.45

  • Retained at neutral at Macquarie; Price Target: $1.60 from $1.47

• AGL Energy (AGL)

  • Downgraded to neutral from overweight at JP Morgan; Price Target: $12.40 from $13.75

• Auckland International Airport (AIA)

  • Retained at equal-weight at Morgan Stanley; Price Target: NZ$8.38

• Alcidion Group (ALC)

  • Downgraded to hold from buy at Bell Potter; Price Target: $0.07 from $0.08

• Ampol (ALD)

  • Retained at equal-weight at Morgan Stanley; Price Target: $34.00

• Aristocrat Leisure (ALL)

  • Retained at outperform at Macquarie; Price Target: $55.00

• Atlas Arteria (ALX)

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.55

• Aurelia Metals (AMI)

  • Retained at outperform at Macquarie; Price Target: $0.25 from $0.27

• APA Group (APA)

  • Retained at outperform at Macquarie; Price Target: $8.47

• Appen (APX)

  • Retained at lighten at Ord Minnett; Price Target: $1.00 from $0.60

• Austal (ASB)

  • Retained at buy at Bell Potter; Price Target: $2.75 from $2.85

  • Retained at neutral at Macquarie; Price Target: $2.50 from $2.55

• Aurizon (AZJ)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.55

• Bellevue Gold (BGL)

  • Retained at outperform at Macquarie; Price Target: $1.70

  • Upgraded to hold from sell at Ord Minnett; Price Target: $1.25

• Beach Energy (BPT)

  • Retained at underweight at Morgan Stanley; Price Target: $1.18

• Commonwealth Bank of Australia (CBA)

  • Retained at underperform at Macquarie; Price Target: $95.00

• Conrad Asia Energy (CRD)

  • Retained at buy at Bell Potter; Price Target: $1.90 from $1.70

• Dicker Data (DDR)

  • Upgraded to buy from neutral at UBS; Price Target: $10.00 from $9.65

• DGL Group (DGL)

  • Retained at hold at Bell Potter; Price Target: $0.55 from $0.65

  • Retained at hold at Morgans; Price Target: $0.55 from $0.65

  • Retained at neutral at UBS; Price Target: $0.59 from $0.75

• Elanor Commercial Property Fund (ECF)

  • Retained at hold at Ord Minnett; Price Target: $0.67 from $0.74

• Emerald Resources (EMR)

  • Downgraded to sell from hold at Ord Minnett; Price Target: $3.40

• Envirosuite (EVS)

  • Retained at hold at Bell Potter; Price Target: $0.05 from $0.04

• Fletcher Building (FBU)

  • Retained at sell at Citi; Price Target: NZ$2.97

• Fisher & Paykel Healthcare Corporation (FPH)

  • Upgraded to outperform from neutral at Macquarie; Price Target: NZ$39.20 from NZ$27.85

• Genesis Minerals (GMD)

  • Retained at outperform at Macquarie; Price Target: $2.40

  • Retained at buy at Shaw and Partners; Price Target: $2.80 from $2.75

• Goodman Group (GMG)

  • Retained at buy at Citi; Price Target: $40.00

• Highcom (HCL)

  • Retained at buy at Bell Potter; Price Target: $0.35

• Harvey Norman (HVN)

  • Retained at buy at UBS; Price Target: $5.00 from $5.50

• Karoon Energy (KAR)

  • Retained at equal-weight at Morgan Stanley; Price Target: $1.98

• Light & Wonder (LNW)

  • Retained at outperform at Macquarie; Price Target: $186.00

• Michael Hill International (MHJ)

  • Retained at neutral at Citi; Price Target: $0.57 from $0.66

  • Retained at outperform at Macquarie; Price Target: $0.73 from $0.81

• Mineral Resources (MIN)

  • Retained at accumulate at Ord Minnett; Price Target: $56.60 from $60.00

  • Retained at sell at UBS; Price Target: $41.00

• Motorcycle (MTO)

  • Upgraded to add from hold at Morgans; Price Target: $2.20 from $1.40

• New Hope Corporation (NHC)

  • Retained at neutral at Citi; Price Target: $4.85

• NRW (NWH)

  • Initiated at add at Morgans; Price Target: $3.85

• Origin Energy (ORG)

  • Retained at underweight at Morgan Stanley; Price Target: $8.86

• Pilbara Minerals (PLS)

  • Retained at sell at UBS; Price Target: $2.00 from $2.20

• Peoplein (PPE)

  • Upgraded to overweight from marketweight at Wilsons; Price Target: $1.18 from $0.98

• Perpetual (PPT)

  • Retained at equal-weight at Morgan Stanley; Price Target: $20.60 from $22.40

• Qube (QUB)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.99

• REA Group (REA)

  • Retained at buy at Citi; Price Target: $230.00

  • Retained at outperform at Macquarie; Price Target: $228.00

• Ramsay Health Care (RHC)

  • Downgraded to hold from add at Morgans; Price Target: $44.77 from $56.54

• Santos (STO)

  • Retained at overweight at Morgan Stanley; Price Target: $8.08

• Transurban Group (TCL)

  • Retained at equal-weight at Morgan Stanley; Price Target: $13.33

• TPG Telecom (TPG)

  • Retained at neutral at Macquarie; Price Target: $5.40 from $5.20

• Viva Energy Group (VEA)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.42

• Woodside Energy Group (WDS)

  • Retained at equal-weight at Morgan Stanley; Price Target: $30.00

Scans