Evening Wrap: ASX 200 logs only modest win despite a deluge of positives...what gives?

Our first winning session for the week. It wasn't pretty (closed off the highs, market breadth could have been better, small gain versus last two session's losses)...

Now, one could whine were were short changed today given a deluge of positive leads from overseas...plus a stonking reading on our own labour market...

But: 1. What good would it do?; and 2. It's a win and we'll take it!

Tech was a natural winner given the heroics of US tech stocks overnight, while interest rate sensitives like Real Estate and Consumer Discretionary breathed a sigh of relief as market rates pared back post benign US inflation and central bank moves.

Doing it tough, and I feel like I am saying this way too often – Energy and Resources...and on that dreary note...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 34.2 points higher at 7,749.7, roughly mid-range at 0.46% from its session low and at 0.36% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 168 to 99.

The Information Technology (XIJ) (+2.1%) was the best performing sector today, likely in response to another barnstorming performance on the tech-laden Nasdaq Composite Index in the USA overnight. Metal detection and prospecting devices company Codan (ASX: CDA) topped the sector performance list after it was initiated at buy at major broker UBS (see Broker Notes section for more broker moves).

The best Tech stocks on the ASX today

Also doing well today were the Health Care (XHJ) (+1.6%) and Real Estate Investment Trusts (XPJ) (+1.3%) sectors. This is interesting in itself given you've got a very defensive sector in Health Care, and a very interest rate sensitive sector in Real Estate.

Market rates fell sharply overnight on the better than expected US CPI data and following dovish rhetoric from the Fed after its meeting at which the US cash rate was held steady. This explains Real Estate's gain today (as well as Consumer Discretionary (XDJ) (+0.94%) , but the strength in Healthcare, which has been growing over recent weeks speaks of a defensive posture among major fund managers. They want to buy, but they're playing defense!

S&P/ASX Healthcare Sector Index (XHJ) chart appears to be basing, but may also be edging toward a breakout

Doing it tough today, and it pains me to say this 😭, were the not-so-dynamic duo of Resources (XJR) (-0.63%) and Energy (XEJ) (-0.34%). You know why...and I think I will leave it there...

ChartWatch

Silver Futures (Front month, back-adjusted) COMEX

That escalated quickly!

The last time we covered silver was in ChartWatch in the Evening Wrap on 7 June.

At that point it was surging back towards the highs with a long white candle. It appears about 10 minutes after I published the article, the price reversed sharply and continued to sell off heavily forming an engulfing black candle.

Such is the life of a technical analyst! Even the best historical demand-side showing is meaningless in the face of changing demand-supply dynamics.

Since then, the price action hasn’t improved a great deal with yesterday's rally appearing to give way to further excess supply in today developing black candle.

But, as today’s candle is still live, I must discount it and give silver the benefit of the doubt. In theory, it hasn’t yet decisively cracked the 29.29-30.19 demand zone, and therefore we should assume for now the short term trend is still up.

It’s clearly only hanging on by its fingernails, though, as the price has closed below the supposed dynamic demand of the short term uptrend twice.

I propose a close below 29.29 will seal the deal in terms of confirming the transition to supply-side control, and therefore increase the probability of a deeper retracement towards the dynamic demand of the long term uptrend ribbon.

To continue the short term uptrend, the demand-side will need to close the silver price above yesterday’s high at 30.19 – and preferably in an emphatic way – i.e., with a long white-bodied candle and a very high close.

Copper Futures (Front month, back-adjusted) COMEX

The short term trend in the copper price has transitioned to down

The last time we covered high grade copper was in ChartWatch in the Evening Wrap on 30 May.

At that time, the writing was very much on the wall for a reversal of the short term trend with several imposing supply-side candles logged.

The situation hasn’t improved for copper, and if anything, it has become materially worse. More supply side candles, a clear transition to falling peaks and falling troughs, the dispatching of the 4.695-4.73 demand zone, and a close below the dynamic demand of the short term uptrend ribbon.

The final nail in the coffin for the short term trend is the fact the short term trend ribbon has transitioned to a zone of dynamic supply – having now repelled several fledgling advances.

4.37-4.43 is demand. White-bodies and or downward pointing shadows there could signal the demand-side is trying to remount a challenge. If that occurs, a subsequent close above the next higher (and now key) point of supply at 4.70 is crucial.

If not, it looks like more of the same for copper in the short term at least. The dynamic demand of long term uptrend ribbon is the obvious target – it will kick in around 4.26-4.28.

Economy

Today

• 11:30 AUS Employment Change & Unemployment Rate May

  • +39.7k vs forecast +30.5k and +38.5k in April

  • Massive skew towards full-time vs part time positions (+41.7k vs -2.1k) suggests continued strong Aussie labour market

  • U-Rate dipped to 4.0% vs forecast 4.0% and 4.1% April

Later this week:

• 22:30 USA Core Producer Price Index (CPI) May (forecast +0.3% m/m and 3.6% p.a. vs +0.3% m/m and +3.7% p.a. April)

Friday

• TBA JPN Bank of Japan Policy Rate & Monetary Policy Statement (forecast no change <0.1%)

Saturday

• 00:00 USA Prelim UoM Consumer Sentiment May (forecast 72.5 vs 69.1 April)

Latest News

Interesting Movers

Trading higher

• +10.4% Ora Banda Mining (OBM) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +9.0% Spartan Resources (SPR) - Continued positive response to yesterday's Exceptional new thick, high-grade intercepts, rise is consistent with prevailing short and long term uptrends 🔎📈

• +8.8% Botanix Pharmaceuticals (BOT) - Continued positive response to yesterday's Final Sofdra Labelling Discussions with FDA, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.6% Codan (CDA) - No news, initiated at buy at UBS with price target: $13.10, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.2% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.9% Integral Diagnostics (IDX) - No news, closed back above long term trend ribbon 🔎📈

• +5.1% Abacus Storage King (ASK) - No news, generally strong ASX property sector today, closed back above short term uptrend ribbon 🔎📈

• +4.9% Temple & Webster Group (TPW) - No news, trying to bounce off long term uptrend ribbon 🔎📈

• +4.6% Tuas (TUA) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.6% Nanosonics (NAN) - Becoming a substantial holder

• +4.2% Peninsula Energy (PEN) - Several director change of interest notices (e.g. Change of Director's Interest Notice - W Heili) showing directors participated in recent retail entitlement offer

• +4.1% Clarity Pharmaceuticals (CU6) - No news, rise is consistent with (the most spectacular) prevailing short and long term uptrends 🔎📈

• +4.0% Polynovo (PNV) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -8.0% ASX (ASX) - Investor Forum 2024 Market Release, fall is consistent with prevailing short and long term downtrends 🔎📉

• -6.5% Jupiter Mines (JMS) - No news, price closed below short term uptrend ribbon 2 days ago

• -6.3% Mayne Pharma Group (MYX) - No news, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down 🔎📉

• -4.8% Liontown Resources (LTR) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.5% Brainchip (BRN) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.4% Lynas Rare Earths (LYC) - Change in substantial holding from CGF (decrease), fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.1% Arcadium Lithium (LTM) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.7% Sigma Healthcare (SIG) - Sigma, Chemist Warehouse merger raises competition concerns, fall is consistent with prevailing short term downtrend, did bounce off the long term uptrend ribbon though...🔎📉

• -3.5% IGO (IGO) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.5% Iluka Resources (ILU) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.3% Champion Iron (CIA) - No news, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down 🔎📉

Broker Notes

• Life360 Inc. (360)

  • Retained at overweight at Morgan Stanley; Price Target: $17.50

• Auckland International Airport (AIA)

  • Retained at outperform at Macquarie; Price Target: NZ$9.56

• Brickworks (BKW)

  • Retained at buy at Citi; Price Target: $37.50

• Codan (CDA)

  • Initiated at buy at UBS; Price Target: $13.10

• Domino's Pizza Enterprises (DMP)

  • Retained at buy at Citi; Price Target: $44.50

  • Retained at buy at UBS; Price Target: $39.00 from $40.00

• Dexus (DXS)

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

• EML Payments (EML)

  • Retained at sector perform at RBC Capital Markets; Price Target: $1.50

• Evolution Mining (EVN)

  • Retained at buy at Jefferies; Price Target: $4.30

  • Retained at neutral at Macquarie; Price Target: $4.00 from $4.10

  • Retained at overweight at Morgan Stanley; Price Target: $4.20

  • Retained at underperform at RBC Capital Markets; Price Target: $3.70

• Global Lithium Resources (GL1)

  • Retained at buy at Shaw and Partners; Price Target: $2.20

• Goodman Group (GMG)

  • Retained at buy at Citi; Price Target: $32.50 from $40.00

• Growthpoint Properties Australia (GOZ)

  • Retained at buy at Citi; Price Target: $2.60

• GPT Group (GPT)

  • Retained at buy at Citi; Price Target: $4.90

• Helloworld Travel (HLO)

  • Retained at buy at Shaw and Partners; Price Target: $3.80

• Lovisa (LOV)

  • Downgraded to hold from buy at Jefferies; Price Target: $35.00 from $39.00

• Mirvac Group (MGR)

  • Retained at neutral at Citi; Price Target: $2.10

• Nick Scali (NCK)

  • Retained at buy at Citi; Price Target: $17.30

• Nickel Industries (NIC)

  • Retained at overweight at Morgan Stanley; Price Target: $0.95

• Origin Energy (ORG)

  • Retained at overweight at Jarden; Price Target: $10.40 from $10.61

  • Retained at outperform at Macquarie; Price Target: $10.52

  • Retained at outperform at RBC Capital Markets; Price Target: $11.00

• Pioneer Credit (PNC)

  • Retained at buy at Shaw and Partners; Price Target: $0.80

• Siteminder (SDR)

  • Retained at buy at Citi; Price Target: $6.30

• Seek (SEK)

  • Upgraded to overweight from neutral at JP Morgan; Price Target: $26.50 from $25.30

• Stockland (SGP)

  • Retained at buy at Citi; Price Target: $5.10

Scans