Evening Wrap: ASX 200 dips despite strong gains in lithium as PLS soars 9%, profit taking sinks gold sector

The S&P/ASX 200 closed 11.9 points lower, down 0.13%.

The most exciting thing today is undoubtedly the surge in the lithium sector 🚀. Elsewhere, the Gold sub index sported the biggest move of any sector (unfortunately, down👎), as gold stocks pulled back sharply on profit taking.

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 economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on the Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 11.9 points lower at 8,853.0, 0.67% from its session low and smack–bang on its session high. Despite the dip in the benchmark, in the broader-based S&P/ASX 300 (XKO) advancers beat decliners by a modest 145 to 128.

Largely ebb and flow at the big end of town today. Healthcare (XHJ) (-0.8%) followed CSL (CSL) (-1.6%) lower, and the mega-caps of Financials (XFJ) (-0.2%) and Resources (XJR) (-0.4%) sapped index points from a benchmark that contained more winners than losers on the day. The big banks were mixed (ANZ (-0.6%) and CBA (-0.6%) softer vs NAB (+0.6%) and WBC (+0.6%) stronger) as the big resources dipped (BHP Group (BHP) (-0.6%) and Rio Tinto (RIO) (-0.1%).

Energy (XEJ) (+0.6%) was the best sector index as uranium and coal stocks bounced (Boss Energy (BOE) (+7.9%) and Whitehaven Coal (WHC) (+2.0%)), whilst the Gold sub index (XGD) (-2.7%) sported the biggest move of any sector as gold stocks "pulled back" on some "profit taking" (that old chestnut! 😁).

Gold prices are unmoved – nope, they’re as strong as ever. Unfortunately, that’s just how local gold stocks roll. All upside momentum, and then (probably) one fund manager wants to get out into a thin market. So, you get moves like Evolution Mining (EVN) (-5.2%), Capricorn Metals (CMM) (-4.3%), Regis Resources (RRL) (-4.1%), and Perseus Mining (PRU) (-3.4%). Frustrating, definitely, but history suggests that as long as the gold price remains strong – they’ve generally come back…🤞

The most exciting thing today is undoubtedly the surge in the lithium sector. Benchmark lithium carbonate futures are approximately 2% higher at RMB 72,780/t at the time of writing, and the Australian spot spodumene price is 1.3% higher at US$810/t.

More likely, though, today’s pop was due to an article published by The Australian (paywall) over the weekend that suggested “Global heavyweights are hunting for Australian lithium assets as the US races to break China’s dominance, while three sovereign wealth funds are eyeing off major deals.”

Either way, local producers went bonkers… Pilbara Minerals (PLS) (+9.1%), Liontown Resources (LTR) (+6.3%), IGO (IGO) (+6.7%) and Mineral Resources (MIN) (+3.3%) all notching tidy gains. Tidy, but excluding MIN – still only a modest fraction of the big losses they incurred last week as a rumour broke that Chinese battery behemoth CATL is on the verge of reopening its Jianxiawo lithium mine.

Today's best blue chip gainers

Today's worst blue chip losers

ChartWatch

Nasdaq Composite Index

Nasdaq Composite Index chart (click here for full size image)

Q: Are you as bored reading my analysis on the Comp as I am writing it? 🥱

• ST & LT Uptrends ↗️↗️

• Rising peaks and rising troughs 📈

• Predominance of demand-side candles ⬜🕯️

• All is good until the opposite of the above / close below the short term uptrend ribbon...

• D > S = P⬆️

• MOTN…

• Can’t tell the future…

• It will end when it ends – the candles will tell us when to worry…

• Stay the course…

• FRP…

You know – all of that boring stuff! 🤦

Yet that’s the thing about trend following – when done right, and when the right trend appears – it can be pretty darn boring 💤💤💤.

But that also means profitable. And I’ll take boring and profitable over exciting and unprofitable any day of the week 💪!

I know you looked at the chart above, and in about 2 seconds – knew exactly what to do here…🎯

S&P/ASX 200 (XJO)

S&P/ASX 200 chart (click here for full size image)

Long suffering disciples of ChartWatch know that today’s 12-point drop on the XJO means nothing, it simply determines what the mainstream news organisations will report in their post-market bulletins (remember the days when you thought those bulletins actually meant something! 😁).

We know that what matters most about today is the shape of that intraday chart (in the Markets section above – bottom left-top right), but more specifically, the downward pointing shadow it creates.

That shadow can only occur for one reason, well two if you account for demand and supply! D > S at the open, all throughout the day, and on the close = P ⬆️

So, the headlines show a 12-point loss, but us candle analysts can see a credible showing of demand-side control.

That’s the important bit – demand-side control. But the importance of today’s intraday move is small within the context of the broader price action and short and long term trends – so let’s bring those in now:

• ST trend = neutral (neither party is in control), equilibrium, some degree of caution required… We’re waiting for a decisive kick one way or the other. The short term trend ribbon is holding the price captive, isn’t it!? It’s kind of half impeding it and supporting it – demonstrating it’s a force to be reckoned with!

• LT trend = up – no questions here – demand-side control remains intact = we are looking for buy the dip opportunities.

• Price action = falling peaks and rising troughs = neutral = matching the short term trend’s neutrality/equilibrium. A close above 8881 would right the ship by setting us back on a course of rising peaks and rising troughs.

• Candles mixed, but improving over the last couple and decent in that 4-5 Sep bounce. Clearly the 3-Sep long black candle (“that candle”) remains the dominant feature – it will need to be dealt with (i.e., close above its high) in order to set us back on a path to 9055.

Today’s trade is a positive development indicating the demand-side is growing in influence of the short term XJO price. Clearly though, there’s still some work to be done to confirm their control and restart the short term uptrend. In the meantime, I remain comfortable with my personal portfolio risk setting of 2/3RP.

Economy

Today

• China 'Data Dump' August

  • New Home Prices: -0.3% m/m vs -0.31% m/m in July

  • Industrial Production: +5.2% p.a. actual vs +5.7% p.a. forecast and +5.7% p.a. in July

  • Retail Sales: +3.4% p.a. actual vs +3.8% p.a. forecast and +3.7% p.a. in July

  • Fixed Asset Investment: +0.5% ytd/p.a. actual vs +1.5% ytd/p.a. forecast and +1.6% ytd/p.a. in July

  • Unemployment Rate: +5.3% actual vs +5.2% forecast and +5.2% in July

Later this week

Tuesday

• 00:00 USA Core Retail Sales August (+0.4% m/m forecast vs +0.3% m/m previous)

Wednesday

• 00:00 USA NAHB Housing Market Index September (33% forecast vs 32 previous)

• 22:30 USA Building Permits & Housing Starts August

  • BP's: 1.37 million forecast vs 1.35 million in July

  • HS's: 1.36 million forecast vs 1.43 million in July

Thursday

• 04:00 USA Federal Reserve FOMC meeting

  • Federal Funds Rate: -0.25% to 4%-4.25% forecast

  • FOMC Economic Projections

  • FOMC Press Conference (at 04:30)

• 11:30 AUS Employment Data August

  • Employment Change: +21,200 m/m forecast vs +24,500 m/m in July

  • Unemployment Rate: 4.2% forecast vs 4.2% in July

• 21:00 UK Bank of England Monetary Official Bank Rate & Monetary Policy Summary

Friday

• TBA JPN BOJ Policy Rate, Monetary Policy Statement, Press Conference

  • Policy Rate: no change to present <0.50% forecast

Latest News

Interesting Movers

Trading higher

• +36.4% Kaili Resources (KLR) - Drilling Completed at Limestone Coast SA, today's move is consistent with recent volatility.

• +25.0% Resolution Minerals (RML) - Exceptional Rock Chip and Soil Results from Antimony Ridge.

• +19.8% LTR Pharma (LTP) - No news, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, added to ChartWatch ASX Scans Uptrends list yesterday 🔎📈

• +17.3% Dateline Resources (DTR) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +15.5% Sunrise Energy Metals (SRL) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +13.0% Immutep (IMM) - No news, bounced in the wake of the recent sharp selloff.

• +12.5% Felix Gold (FXG) - High Grade Antimony Drill Intersections and Project Update, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +11.8% Race Oncology (RAC) - No news, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up 🔎📈

• +11.7% Vulcan Energy Resources (VUL) - No news, general strength across the broader Lithium sector today.

• +10.9% Civmec (CVL) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +10.8% St George Mining (SGQ) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +10.1% Avita Medical (AVH) - AVITA Medical Receives CE Mark for RECELL GO.

• +9.1% Pilbara Minerals (PLS) -Change in substantial holding (JP Morgan Chase increase from 7.3% to 9.0%), general strength across the broader Lithium sector today.

• +9.1% Lumos Diagnostics (LDX) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +9.1% Minerals 260 (MI6) -Denver Gold Conference PresentationN, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up 🔎📈

• +8.5% Cogstate (CGS) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +8.5% Falcon Metals (FAL) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +8.0% Dreadnought Resources (DRE) - Drilling Resumes at Mangaroon Gold, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +8.0% Shape Australia Corporation (SHA) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +7.9% Boss Energy (BOE) - No news, general strength across the broader Uranium sector today.

• +7.9% Emeco (EHL) - Emeco notes press speculation, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +7.8% Zimplats 10c US (ZIM) - No news 🤔.

• +7.5% Fiducian Group (FID) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +7.4% Decidr Ai Industries (DAI) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +6.7% IGO (IGO) - No news, general strength across the broader Lithium sector today.

• +6.4% Duratec (DUR) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +6.3% Liontown Resources (LTR) - No news, general strength across the broader Lithium sector today.

Trading lower

• -10.0% Ora Banda Mining (OBM) – General weakness across the broader Gold sector today.

• -9.7% African Gold (A1G) – General weakness across the broader Gold sector today.

• -8.1% Metallium (MTM) – Cleansing Notice - Option Conversion.

• -8.0% Zenith Minerals (ZNC) – No news 🤔.

• -7.7% Matsa Resources (MAT) – No news, general weakness across the broader Gold sector today.

• -6.4% West Wits Mining (WWI) – WWI Completes $17.5 Million Placement.

• -6.1% Turaco Gold (TCG) – No news, general weakness across the broader Gold sector today.

• -5.4% Talga Group (TLG) – No news 🤔.

• -5.3% Evolution Mining (EVN) – No news, general weakness across the broader Gold sector today.

• -5.2% Fleetwood (FWD) – No news 🤔.

• -5.2% Washington H Soul Pattinson & Company (SOL) – Annual Report.

Broker Moves

The a2 Milk Company (A2M)

• Retained at hold at Bell Potter; Price Target: $7.85

Astral Resources NL (AAR)

• Retained at buy at Shaw and Partners; Price Target: $0.45

Adairs (ADH)

• Retained at hold at Bell Potter; Price Target: $2.60

Aristocrat Leisure (ALL)

• Retained at buy at Bell Potter; Price Target: $79.00

• Retained at buy at Citi; Price Target: $71.00

AMP (AMP)

• Retained at neutral at UBS; Price Target: $1.80

Aspen Group (APZ)

• Retained at buy at Bell Potter; Price Target: $4.85

ASX (ASX)

• Retained at sell at UBS; Price Target: $62.15

AUB Group (AUB)

• Retained at neutral at UBS; Price Target: $36.00

Accent Group (AX1)

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

• Initiated at buy at Goldman Sachs; Price Target: $1.70

Bega Cheese (BGA)

• Retained at buy at Bell Potter; Price Target: $7.00

Brickworks (BKW)

• Retained at neutral at Macquarie; Price Target: $31.70

Boss Energy (BOE)

• Retained at underweight at Morgan Stanley; Price Target: $1.65

Breville Group (BRG)

• Retained at outperform at Macquarie; Price Target: $39.20

Bubs Australia (BUB)

• Retained at hold at Bell Potter; Price Target: $0.17

Cobram Estate Olives (CBO)

• Retained at hold at Bell Potter; Price Target: $2.90

Challenger (CGF)

• Retained at buy at UBS; Price Target: $9.30

Centuria Industrial REIT (CIP)

• Retained at buy at Bell Potter; Price Target: $3.65

Collins Foods (CKF)

• Retained at buy at Citi; Price Target: $10.13

Centuria Capital Group (CNI)

• Retained at buy at Bell Potter; Price Target: $2.40

Centuria Office REIT (COF)

• Retained at sell at Bell Potter; Price Target: $1.10

Coles Group (COL)

• Retained at buy at Bell Potter; Price Target: $24.30

• Retained at buy at Citi; Price Target: $25.40

Computershare (CPU)

• Retained at sell at UBS; Price Target: $41.20

Cedar Woods Properties (CWP)

• Retained at buy at Bell Potter; Price Target: $8.75

Digico Infrastructure REIT (DGT)

• Retained at hold at Bell Potter; Price Target: $3.00

Domino's Pizza Enterprises (DMP)

• Retained at sell at Citi; Price Target: $13.25

Deterra Royalties (DRR)

• Retained at equal-weight at Morgan Stanley; Price Target: $4.00

Dexus Convenience Retail REIT (DXC)

• Retained at buy at Bell Potter; Price Target: $3.45

Dexus Industria REIT (DXI)

• Retained at buy at Bell Potter; Price Target: $3.10

Endeavour Group (EDV)

• Retained at hold at Bell Potter; Price Target: $4.55

• Retained at neutral at Citi; Price Target: $4.18

Fortescue (FMG)

• Retained at overweight at Morgan Stanley; Price Target: $19.90

GDI Property Group (GDI)

• Retained at buy at Bell Potter; Price Target: $0.85

Golden Horse Minerals (GHM)

• Retained at buy at Shaw and Partners; Price Target: $0.81

Goodman Group (GMG)

• Retained at buy at Bell Potter; Price Target: $40.80

HealthCo Healthcare and Wellness REIT (HCW)

• Retained at buy at Bell Potter; Price Target: $1.00

HomeCo Daily Needs REIT (HDN)

• Retained at hold at Bell Potter; Price Target: $1.40

• Downgraded to hold from buy at Moelis Australia; Price Target: $1.44 from $1.36

HMC Capital (HMC)

• Retained at hold at Bell Potter; Price Target: $3.60

HUB24 (HUB)

• Retained at neutral at UBS; Price Target: $112.00

Harvey Norman Holdings (HVN)

• Retained at buy at Bell Potter; Price Target: $8.30

• Retained at buy at Citi; Price Target: $7.70

IGO (IGO)

• Retained at underweight at Morgan Stanley; Price Target: $3.90

Inghams Group (ING)

• Retained at hold at Bell Potter; Price Target: $2.75

JB Hi-Fi (JBH)

• Retained at buy at Bell Potter; Price Target: $119.00

• Retained at buy at Citi; Price Target: $120.00

James Hardie Industries Plc (JHX)

• Retained at neutral at Citi; Price Target: $35.00

• Retained at outperform at Macquarie; Price Target: $37.20

Kogan.com (KGN)

• Retained at hold at Bell Potter; Price Target: $4.30

Lifestyle Communities (LIC)

• Retained at hold at Bell Potter; Price Target: $5.70

Light & Wonder Inc. (LNW)

• Retained at buy at Bell Potter; Price Target: $178.00

Lovisa Holdings (LOV)

• Retained at hold at Bell Potter; Price Target: $42.00

Lynas Rare Earths (LYC)

• Retained at overweight at Morgan Stanley; Price Target: $14.75

Magellan Financial Group (MFG)

• Retained at neutral at UBS; Price Target: $10.70

Mineral Resources (MIN)

• Retained at overweight at Morgan Stanley; Price Target: $41.50

Medibank Private (MPL)

• Retained at neutral at UBS; Price Target: $5.35

Nick Scali (NCK)

• Initiated at neutral at Goldman Sachs; Price Target: $21.00

NIB Holdings (NHF)

• Retained at neutral at UBS; Price Target: $8.60

Noumi (NOU)

• Retained at buy at Bell Potter; Price Target: $0.19

Netwealth Group (NWL)

• Retained at neutral at UBS; Price Target: $35.00

Ora Banda Mining (OBM)

• Downgraded to underperform from outperform at Macquarie; Price Target: $0.95

Paladin Energy (PDN)

• Retained at equal-weight at Morgan Stanley; Price Target: $7.30

Pilbara Minerals (PLS)

• Retained at overweight at Morgan Stanley; Price Target: $2.30

Premier Investments (PMV)

• Retained at buy at Bell Potter; Price Target: $26.50

Pinnacle Investment Management Group (PNI)

• Retained at neutral at UBS; Price Target: $23.00

Perpetual (PPT)

• Retained at neutral at UBS; Price Target: $22.50

Platinum Asset Management (PTM)

• Retained at neutral at UBS; Price Target: $0.53

PEXA Group (PXA)

• Retained at buy at UBS; Price Target: $17.45

QBE Insurance Group (QBE)

• Retained at buy at UBS; Price Target: $25.00

Retail Food Group (RFG)

• Retained at buy at Bell Potter; Price Target: $2.60

Region Group (RGN)

• Retained at buy at Bell Potter; Price Target: $2.70

Rio Tinto (RIO)

• Retained at equal-weight at Morgan Stanley; Price Target: $121.00

Reliance Worldwide Corporation (RWC)

• Upgraded to neutral from underperform at Bank of America; Price Target: $4.35 from $4.00

• Retained at outperform at Macquarie; Price Target: $5.30

South32 (S32)

• Retained at overweight at Morgan Stanley; Price Target: $3.30

Scentre Group (SCG)

• Retained at buy at Citi; Price Target: $4.60

Steadfast Group (SDF)

• Retained at buy at UBS; Price Target: $7.00

Sandfire Resources (SFR)

• Retained at underweight at Morgan Stanley; Price Target: $8.35

Step One Clothing (STP)

• Retained at buy at Bell Potter; Price Target: $0.85

Temple & Webster Group (TPW)

• Retained at hold at Bell Potter; Price Target: $28.00

• Initiated at buy at Goldman Sachs; Price Target: $27.65

Treasury Wine Estates (TWE)

• Retained at sell at Citi; Price Target: $7.00

Universal Store Holdings (UNI)

• Retained at buy at Bell Potter; Price Target: $10.50

Woodside Energy Group (WDS)

• Retained at neutral at Macquarie; Price Target: $25.00

Whitehaven Coal (WHC)

• Retained at overweight at Morgan Stanley; Price Target: $8.30

Woolworths Group (WOW)

• Retained at hold at Bell Potter; Price Target: $29.80

Scans