Evening Wrap: ASX 200 holds firm as investors take a breather, lithium stocks rise above the pack

Four days of accelerating buying, culminating in yesterday's spree, came to a relative halt today. Investors are catching their breath and contemplating their next move – makes perfect sense given there's so many competing bullish and bearish factors right now.

Today’s daily range of 26.8 points, or just 0.34%, was the smallest in over 6 months. A range this small has only occurred in less than 2.2% of S&P/ASX200 trading sessions – so this degree of apathy is pretty rare!

Across the sectors it was suitably ho-hum, with industrials the best (up 0.7%), and consumer discretionary the worst (down 0.3%).

The only semblance of a special mention today goes to a cluster of lithium stocks led by Vulcan Energy (VUL), Wildcat Resources (WC8), and Liontown Resources (LTR) which each logged very decent gains.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 11.2 points higher at 7,804.5, 0.21% from its session low and 0.13% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a narrow 141 to 120.

7 sectors were up and 4 were down, but none of them moved a great deal in either direction.

Of the winners, Industrials (XNJ) (+0.73%) was the best. I bet, like me, you're probably wondering which stocks are actually in the industrial sector?

Well, the table below will give you some idea, at least, the 12 best performers from today. Qantas (QAN), Brambles (BXB), Aurizon Holdings (AZJ), Computershare (CPU), Monadelphous Group (MND), and Downer Group (DOW) are also in the XNJ, and each also delivered a better-than-market performance during the session.

Who the hell is in the Industrials Sector anyway!? 🤷‍♂️

Sector losses were confined to magnitudes no less than the Consumer Discretionary (XDJ) sector's very modest 0.36% dip – but I note that serial underperformers Energy (XEJ) (-0.04%) and Consumer Staples (XSJ) (-0.02%) were again overlooked by investors.

The only semblance of a special mention today goes to the lithium sector which had a half-decent day. Vulcan Energy (ASX: VUL), Wildcat Resources (ASX: WC8), and Liontown Resources (ASX: LTR) each logged very decent gains.

Decent gains today in ASX lithium stocks

ChartWatch

Uranium Futures COMEX

A new short term uptrend continues to develop

Just a quick check up here – if only to confirm everything is going as planned. Uranium futures have taken another little leg up maintaining price action of rising peaks and rising troughs.

It’s still a relative vacuum of major points of supply until the triple peaks starting from 104.65.

89.50-89.95 is demand, as is likely the short term trend ribbon which is coincidentally about to cross up.

Bigger picture, as long as the uranium futures price remains above 83.25 the long term uptrend is intact.

(Our last check up on uranium futures was in the Evening Wrap on 1 May)

Brent Crude Oil Futures NYMEX

The prevailing short term downtrend is much intact here, with just the long term uptrend ribbon left as support

I can be equally brief here, as again, as the price appears to be continuing in the direction much as expected in my last update.

Instead of demand-side candles at the 82.77 point of demand, supply side candle have appeared. Today’s candle (still live) threatens to close below this level, and therefore clear the way for a test of the dynamic demand at the long term uptrend ribbon.

Again, I recommend you watch the candles very closely there. If they’re not demand-side (i.e., white bodies and or downward pointing shadows), but instead supply-side (i.e., black bodies and or upward pointing shadows), the Brent price remains dominated by supply and a change of long term trend direction is therefore likely.

A close below the long term trend ribbon, but to be safe, the point of demand at 79.51, will confirm a new long term downtrend in Brent has begun.

The bull case, as unlikely as it seems right now, sees a bunch of demand-side candles logged at the long term uptrend ribbon, a subsequent return to rising peaks and rising troughs, and at least a close above 84.76.

(Our last check up on Brent crude oil futures was in the Evening Wrap on 2 May)

Newcastle Coal (Thermal) Futures ICE

Is this the very early stages of a return to a long term uptrend?

Sticking with the energy theme, let's take another look at Newcastle thermal coal futures.

I'm going to call this a very good impersonation of a chart that's trying to change its long term trend.

We know the long term downtrend ribbon is an area of dynamic supply – and it has done its job very well thus far. But the top of that ribbon is 156.30, and a close above it would suggest the supply held within the ribbon has been accounted for. For me, this would seal the deal on a change to a long term uptrend.

There's nothing in the price action (still rising peaks and rising troughs), short term trend (still up, and importantly, still providing dynamic demand), or the volume (still indicates lively interest) to suggest a change of long term trend can't occur.

(Our last check up on Newcastle coal futures was in the ChartWatch on 22 April)

Economy

Today

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

Later this week

Friday

• 03:00 USA 30 year bond auction

Saturday

• USA Preliminary University of Michigan Consumer Sentiment

  • Expected -0.9% to 76.3% vs -0.9% to 77.2% in April

Latest News

Interesting Movers

Trading higher

• +11.0% Chalice Mining (CHN) - Presentation - Macquarie Australia Conference

• +10.1% Vulcan Energy Resources (VUL) - No news, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +8.0% Polynovo (PNV) - First $A9M sales month and $A10M revenue month and Macquarie Australia Conference - Presentation, rise is consistent with prevailing long term uptrend, short term trend is transitioning from down to up 🔎📈

• +7.4% Botanix Pharmaceuticals (BOT) - Botanix Commercial Day Webinar Presentation, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.7% Pinnacle Investment Management Group (PNI) - Presentation - Macquarie Australia Conference, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.9% Clarity Pharmaceuticals (CU6) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.1% Wildcat Resources (WC8) - No news, generally strong ASX lithium sector today

• +5.1% Lifestyle Communities (LIC) - Retained at buy at Citi, price target $17.90

• +4.7% Mader Group (MAD) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.3% Macquarie Technology Group (MAQ) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.1% Global Lithium Resources (GL1) - No news, generally strong ASX lithium sector today

• +3.9% Liontown Resources (LTR) - No news, generally strong ASX lithium sector today

Trading lower

• -7.1% Perpetual (PPT) - Perpetual concludes Strategic Review, fall is consistent with prevailing short and long term downtrends 🔎📉

• -5.3% Lycopodium (LYL) - No news 🤔

• -5.3% Imdex (IMD) - Downgraded to neutral from overweight at Jarden and price target cut to $1.95 from $2.10; price target also cut at Macquarie (see Broker Moves), fall is consistent with prevailing short term downtrend, closed below long term uptrend ribbon 🔎📉

• -4.2% APM Human Services International (APM) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.8% Mesoblast (MSB) - No news 🤔

• -3.8% Adairs (ADH) - No news, fall is consistent with prevailing short term downtrend, falling peaks and falling troughs 🔎📉

• -3.7% Domain Holdings Australia (DHG) - Macquarie Australia Conference Commentary and Presentation, fall is consistent with prevailing long term downtrend, rebounded lower from long term downtrend ribbon 🔎📉

Broker Notes

• AGL Energy (AGL)

  • Retained at neutral at Macquarie; Price Target: $10.30 from $9.60

• ANZ Group (ANZ)

  • Retained at sell at Citi; Price Target: $24.50 from $26.00

  • Retained at neutral at Jarden; Price Target: $29.00 from $28.00

  • Retained at neutral at JP Morgan; Price Target: $27.00 from $26.60

  • Retained at underperform at Macquarie; Price Target: $26.50 from $27.00

  • Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $27.70 from $27.90

  • Retained at neutral at UBS; Price Target: $30.00

• Baby Bunting Group (BBN)

  • Initiated at sector perform at RBC Capital Markets; Price Target: $1.80

• Computershare (CPU)

  • Retained at outperform at Macquarie; Price Target: $29.00

• Cleanaway Waste Management (CWY)

  • Retained at outperform at Macquarie; Price Target: $3.20 from $3.10

• Dexus (DXS)

  • Retained at neutral at Citi; Price Target: $8.20

  • Retained at underweight at Morgan Stanley; Price Target: $8.14

• HMC Capital (HMC)

  • Retained at equal-weight at Morgan Stanley; Price Target: $7.05 from $6.81

• Insignia Financial (IFL)

  • Initiated at hold at Ord Minnett; Price Target: $2.50

• Imdex (IMD)

  • Downgraded to neutral from overweight at Jarden; Price Target: $1.95 from $2.10

  • Retained at outperform at Macquarie; Price Target: $2.30 from $2.45

• Judo Capital Holdings (JDO)

  • Retained at equal-weight at Morgan Stanley; Price Target: $1.25

• Lifestyle Communities (LIC)

  • Retained at buy at Citi; Price Target: $17.90

• News Corporation (NWS)

  • Retained at outperform at Macquarie; Price Target: $42.00 from $43.00

• Origin Energy (ORG)

  • Retained at equal-weight at Morgan Stanley; Price Target: $9.26

• QBE Insurance Group (QBE)

  • Initiated at hold at Bell Potter; Price Target: $18.47

  • Retained at neutral at Macquarie; Price Target: $18.00

  • Retained at overweight at Morgan Stanley; Price Target: $20.10 from $19.80

• Regis Resources (RRL)

  • Retained at outperform at Macquarie; Price Target: $2.60

• Reliance Worldwide Corporation (RWC)

  • Retained at outperform at Macquarie; Price Target: $6.10

• Sims (SGM)

  • Retained at buy at Citi; Price Target: $13.50

  • Retained at neutral at Jarden; Price Target: $12.10 from $14.00

  • Retained at outperform at Macquarie; Price Target: $13.00 from $16.00

  • Retained at underweight at Morgan Stanley; Price Target: $10.00 from $12.00

  • Downgraded to underperform from sector perform at RBC Capital Markets; Price Target: $10.75 from $14.00

  • Retained at buy at UBS; Price Target: $13.50 from $14.50

• The Lottery Corporation (TLC)

  • Retained at neutral at Citi; Price Target: $5.50

Scans