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Market Wraps
/Evening Wrap: ASX 200 rebounds on tech, retail, and health care strength, resources and energy stocks keep tanking
Market Wraps
Evening Wrap: ASX 200 rebounds on tech, retail, and health care strength, resources and energy stocks keep tanking
Tue 23 Jul 24, 5:34pm (AEST)
Stocks in article
The S&P/ASX 200 closed 39.4 points higher, up 0.50%.
A welcome, albeit modest return to gains for the S&P/ASX 200.
But, it wasn't a case of the rising tide lifting all ships. There were solid gains in technology, consumer discretionary, and health care stocks – three of the strongest performing sectors over the last 12 months.
Elsewhere, losses in resources and energy stocks continued...you guessed it – two of the worst performing sectors over the last 12 months.
The trend is your friend, or is it? I guess it depends which side of the trend you're on!
There's one trend you can count on: You'll get everything you need to know about today's ASX trading day from our Evening Wrap, so...
Let's dive in!
Today in Review
Tue 23 Jul 24, 4:28pm (AEST)
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Markets
ASX 200 Session Chart
The S&P/ASX 200 (XJO) finished 39.4 points higher at 7,971.1, 0.50% from its session low and just 0.28% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 180 to 92.
Information Technology (XIJ) (+1.6%) was the best performing sector today, likely in response to a corresponding recovery in US tech stocks Monday. Encouragingly, gains across the sector were both sizeable and broad based. Note that I’ve included in the sector winners table below several stocks from the Communication Services (XTJ) (+0.75%) sector given the substantial overlap between it and the XIJ.
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
|---|---|---|---|---|---|
Superloop (SLC) | $1.535 | +$0.125 | +8.9% | +0.3% | +130.8% |
Nuix (NXL) | $3.40 | +$0.26 | +8.3% | +17.6% | +203.6% |
Siteminder (SDR) | $5.30 | +$0.13 | +2.5% | +2.7% | +44.0% |
Iress (IRE) | $10.08 | +$0.23 | +2.3% | +31.1% | -5.2% |
News Corporation (NWS) | $43.40 | +$0.94 | +2.2% | +3.4% | +44.4% |
Wisetech Global (WTC) | $96.17 | +$2.08 | +2.2% | +2.2% | +17.3% |
Car Group (CAR) | $35.15 | +$0.71 | +2.1% | +3.3% | +47.8% |
Codan (CDA) | $12.22 | +$0.22 | +1.8% | +7.2% | +52.2% |
Xero (XRO) | $135.90 | +$2.39 | +1.8% | +3.5% | +6.8% |
Dicker Data (DDR) | $10.10 | +$0.15 | +1.5% | +4.1% | +27.7% |
Aussie Broadband (ABB) | $3.01 | +$0.04 | +1.3% | -13.3% | +14.4% |
Megaport (MP1) | $11.11 | +$0.14 | +1.3% | -5.6% | +11.7% |
Life360 (360) | $16.25 | +$0.19 | +1.2% | +3.3% | +106.2% |
Hansen Technologies (HSN) | $4.39 | +$0.05 | +1.2% | +1.6% | -10.4% |
REA Group (REA) | $196.32 | +$1.99 | +1.0% | -0.5% | +31.3% |
Nextdc (NXT) | $17.01 | +$0.17 | +1.0% | -4.2% | +34.1% |
ASX Tech stocks today
Also doing well today were two sectors with excellent sector trends, the Health Care (XHJ) (+1.4%) sector and the Consumer Discretionary (XDJ) (+1.3%) sector. I might have mentioned somewhere along the line my view that the trend is your friend…
Consumer Discretionary (XDJ) and Health Care (XHJ) sectors
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
|---|---|---|---|---|---|
Aluminium - LME Official Cash | $2,259 | -$53 | -2.3% | -7.9% | +5.5% |
Copper - LME Official Cash | $9,127.50 | -$86.50 | -0.9% | -4.6% | +9.3% |
Iron Ore CFR China 62pct Fe Spot | $108.16 | -$0.29 | -0.3% | +0.9% | -3.3% |
Nickel - LME Official Cash | $15,850 | -$255 | -1.6% | -6.4% | -23.4% |
Lead - LME Official Cash | $2,050.50 | -$49.50 | -2.4% | -4.4% | -1.5% |
Tin - LME Official Cash | $30,200 | -$495 | -1.6% | -7.5% | +6.5% |
Zinc - LME Official Cash | $2,660.50 | -$56.5 | -2.1% | -4.5% | +13.2% |
Lithium Carbonate 99.5pct Battery Grade | $86,350 | -$50 | -0.1% | -9.0% | -71.9% |
Spodumene Concentrate Index ($US-mt) | $961 | -$12 | -1.2% | -12.2% | -76.0% |
Silver/U.S. Dollar Spot Rate | $29.11 | -$0.08 | -0.3% | -1.4% | +17.6% |
Gold/U.S. Dollar Spot Rate | $2,396.12 | -$4.17 | -0.2% | +3.2% | +21.9% |
West Texas Int. Crude Oil ($US/brl) | $78.40 | -$0.24 | -0.3% | -1.9% | +14.6% |
Commodities down again
Talking about trends and friends, I guess when we discuss these next two sectors – the two worst performers on the day – there’s some interpretation required of my prior statement. Clearly, if you’re long Resources (XJR) (-0.92%) and Energy (XEJ) (-2%) stocks, the trend is not your friend. So is the statement faulty, or is your long position faulty? One of these two possibilities is likely correct. 🤔
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
Woodside Energy Group (WDS) | $27.53 | -$1.07 | -3.7% | +2.1% | -23.3% |
WA1 Resources (WA1) | $14.99 | -$0.56 | -3.6% | -13.2% | +163.0% |
Develop Global (DVP) | $1.880 | -$0.07 | -3.6% | -14.5% | -43.9% |
Emerald Resources (EMR) | $3.82 | -$0.14 | -3.5% | +11.4% | +65.4% |
Paladin Energy (PDN) | $12.05 | -$0.38 | -3.1% | -9.0% | +60.7% |
Red 5 (RED) | $0.390 | -$0.01 | -2.5% | -4.9% | +95.0% |
Nickel Industries (NIC) | $0.785 | -$0.02 | -2.5% | -1.9% | -3.7% |
Deep Yellow (DYL) | $1.215 | -$0.03 | -2.4% | -11.0% | +74.8% |
Regis Resources (RRL) | $1.865 | -$0.045 | -2.4% | +4.2% | -14.8% |
Genesis Minerals (GMD) | $2.12 | -$0.05 | -2.3% | +15.8% | +47.2% |
Ramelius Resources (RMS) | $1.915 | -$0.04 | -2.0% | 0% | +38.8% |
Core Lithium (CXO) | $0.098 | -$0.002 | -2.0% | +24.1% | -89.3% |
Evolution Mining (EVN) | $3.94 | -$0.08 | -2.0% | +11.3% | +5.3% |
Boss Energy (BOE) | $3.67 | -$0.07 | -1.9% | -7.1% | +20.3% |
ASX Resources and Energy stocks today
ChartWatch
S&P/ASX 200 (XJO)
Green marks the spot...
The last time we covered XJO was in ChartWatch in the Evening Wrap on 19 July.
In that update, we had just begun the current pullback from the 8084 all time high set on 17 July. We discussed the prospect of testing the old zone of supply between 7839-7911 on the basis that it would potentially act as a future zone of demand.
Today’s white candle appears to demonstrate 7839-7911 is behaving as demand for now.
The close could have been better (higher), indicating excess demand was sustained all the way into the close. Still, there’s clearly some demand creeping in here, and I have no reason to doubt the short term trend (remains up) and the price action (remains rising peaks and rising troughs) as both continue to indicate short term demand-side control.
8084 is supply. We’re likely to trade in a range between 7839-7911 and 8084 until we can close on the other side of either one of these boundaries. Again, my default assumption is the one that follows the prevailing short and long term trends – i.e., up.
Uranium Futures (Front month, back-adjusted) COMEX
An interesting chart
The last time we covered uranium was in ChartWatch in the Evening Wrap on 17 July.
In that update we noted the “probability of a rollover to commence a new long term downtrend is growing”.
The uranium price continues to edge lower towards the key 83.15 point of demand (Monday’s close 83.30). I still believe that a close below 83.15 seals the deal on the transition of uranium’s long term trend from uptrend to downtrend – but I note Monday’s close is the first close below the long term uptrend ribbon since the current bull market began in September 2022.
The short term trend remains down and the price action remains falling peaks and falling troughs – both consistent with short term supply-side control.
86.75 is still supply. 76.40 is the next point of demand below 83.15.
Copper - LME Official Cash
An interesting chart
The last time we covered LME copper was in ChartWatch in the Evening Wrap all the way back on 18 June.
I forgot I made this statement, but in that update I note I referred to an even earlier update on 5 June where I warned of a "blow-off top" developing in copper.
A blow off top is generally a higher probability when a very sharp and large downward reversal is observed. It’s also usually not a good sign when the price slices straight through key static and dynamic demand levels.
In copper’s case, it was the very sharp reversal after the 20 May peak at 10,857, then subsequent break of the 9974 point of demand (static), as well as the short term uptrend ribbon. Note also, that once the short term uptrend ribbon was breached – it then acted as an area of dynamic supply (e.g., 9930 point of supply).
I also mentioned in the last update that rallies are more credible when they’re large and rapid, too. A V-shaped rally is required to stop the rot during any protracted decline. It signals that significant demand has entered the market, that the shorts are likely now covering back, and it will begin to drag in momentum traders.
We’re not there yet on copper. The short term trend is down and the price action is falling peaks and falling troughs.
But, if a V-shaped rally is going to occur, right here is where it might start from – the dynamic demand of the long term uptrend ribbon. Copper wants to get a move on, though, as it’s dicing with a break of that long term uptrend ribbon.
I suggest it needs to keep closing above the long term uptrend ribbon, and 8973 as a last resort – or a new long term copper downtrend beckons.
As always, a return to rising peaks and rising troughs is a key price action trait of incoming demand-side control (particularly here because we don’t have the benefit of candles).
Economy
Today
There weren't any major data releases in our time zone today
Later this week
Wednesday
00:00 USA Existing Home Sales (3.99M forecast vs 4.11M previous)
09:00 AUS Flash Manufacturing Index & Flash Services Index
17:15 EUR Flash Manufacturing Index & Flash Services Index (FRA, GER, EUR, UK)
23:45 USA Flash Manufacturing Index & Flash Services Index
Thursday
00:00 New Home Sales (643k forecast vs 619k previous)
22:30 USA June Quarter Advance GDP (+1.95% p.a. vs +1.4% p.a. March Qtr)
22:20 USA Core Durable Goods Orders June (+0.2% in June vs -0.1% in May)
Friday
22:30 USA Core PCE Price Index June (+0.2% forecast vs +0.1% in May)
22:30 USA Personal Income (+0.4% forecast vs +0.5% in May) & Personal Spending June (+0.3% forecast vs +0.2% in May)
Latest News
Interesting Movers
Trading higher
+23.6% Spartan Resources (SPR) - Dalgaranga Gold Project - Mineral Resource Estimate Update, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
+13.0% Mesoblast (MSB) - FDA Accepts Mesoblast's BLA Resubmission for Remestemcel-L, rise is consistent with prevailing short and long term uptrends 🔎📈
+9.2% Southern Cross Electrical Engineering (SXE) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
+8.9% Superloop (SLC) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
+8.3% Nuix (NXL) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
+7.9% Polynovo (PNV) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
+6.8% Insignia Financial (IFL) - Continued positive response to yesterday's Insignia Financial 4Q24 Quarterly Business Update, plus several broker updates today (see Broker Moves section below)
+6.2% Zip Co. (ZIP) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
+5.3% Australian Clinical Labs (ACL) - Becoming a substantial holder
+4.6% Super Retail Group (SUL) - No news, rise is consistent with prevailing short and long term uptrends (first time Feature Chart in my ChartWatch ASX Scans Uptrends list today! 💪) 🔎📈
+4.2% Elders (ELD) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans Uptrends lists!) 🔎📈
Trading lower
-8.4% Droneshield (DRO) - Continued negative response to yesterday's Quarterly Activities/Appendix 4C Cash Flow Report
-5.9% Ora Banda Mining (OBM) - June 2024 Quarterly Activities and Cashflow Reports, more generally, another tough day for ASX gold stocks on pullback in gold price
-5.6% Austin Engineering (ANG) - Austin appoints Sybrandt Van Dyk as CEO and MD
-3.7% Woodside Energy Group (WDS) - Second Quarter 2024 Report, fall is consistent with prevailing long term downtrend, closed below short term trend ribbon 🔎📉
-3.6% WA1 Resources (WA1) - Continued negative response to yesterday's Corporate Presentation - West Arunta Project, fall is consistent with prevailing short term downtrend, touching long term uptrend ribbon
-3.6% Develop Global (DVP) - No news, fall is consistent with prevailing short and long term downtrends (has been a regular in my ChartWatch ASX Scans downtrends lists!) 🔎📉
-3.5% Emerald Resources (EMR) - No news, another tough day for ASX gold stocks on pullback in gold price
-3.1% Paladin Energy (PDN) - No news, another tough day for ASX uranium stocks on falling uranium price (see ChartWatch section above)
-2.4% Deep Yellow (DYL) - No news, another tough day for ASX uranium stocks on falling uranium price (see ChartWatch section above)
Broker Notes
Life360 (360)
Retained at overweight at Morgan Stanley; Price Target: $19.00 from $17.50
The A2 Milk Company (A2M)
Retained at buy at Citi; Price Target: $7.85
Accent Group (AX1)
Retained at buy at Citi; Price Target: $2.47 from $2.43
Droneshield (DRO)
Downgraded to hold from buy at Bell Potter; Price Target: $1.60 from $1.00
Downgraded to hold from buy at Shaw and Partners; Price Target: $1.30 from $1.40
Retained at buy at Shaw and Partners; Price Target: $4.10
Insignia Financial (IFL)
Upgraded to neutral from sell at Citi; Price Target: $2.65 from $2.20
Retained at underweight at Morgan Stanley; Price Target: $2.30
Retained at sell at UBS; Price Target: $2.30
Incitec Pivot (IPL)
Retained at neutral at Macquarie; Price Target: $3.00
Iress (IRE)
Retained at hold at Jefferies; Price Target: $9.10 from $8.70
Retained at overweight at JP Morgan; Price Target: $10.20 from $8.80
Retained at neutral at Macquarie; Price Target: $9.70 from $8.85
Retained at add at Morgans; Price Target: $10.74 from $9.85
JB HI-FI (JBH)
Retained at buy at Citi; Price Target: $74.00 from $65.00
Medibank Private (MPL)
Retained at neutral at Macquarie; Price Target: $3.70
NIB (NHF)
Retained at neutral at Macquarie; Price Target: $7.50
Paladin Energy (PDN)
Retained at buy at Bell Potter; Price Target: $15.70
Retained at buy at Citi; Price Target: $16.00
Retained at overweight at Morgan Stanley; Price Target: $16.65
Retained at buy at Shaw and Partners; Price Target: $16.80
Regis Resources (RRL)
Retained at buy at Bell Potter; Price Target: $2.70 from $2.80
Retained at neutral at Citi; Price Target: $1.90
Retained at overweight at Morgan Stanley; Price Target: $2.10
South32 (S32)
Upgraded to buy from neutral at Citi; Price Target: $3.35 from $4.00
Retained at buy at Jefferies; Price Target: $3.60 from $4.20
Retained at overweight at JP Morgan; Price Target: $3.60 from $4.40
Retained at outperform at Macquarie; Price Target: $4.00 from $4.50
Retained at equal-weight at Morgan Stanley; Price Target: $3.80
Retained at outperform at RBC Capital Markets; Price Target: $3.80 from $4.00
Retained at buy at UBS; Price Target: $3.80 from $4.20
Universal Store (UNI)
Retained at buy at Bell Potter; Price Target: $6.65 from $6.15
Retained at buy at Citi; Price Target: $6.47 from $5.30
Retained at neutral at Macquarie; Price Target: $6.30 from $4.80
Woodside Energy Group (WDS)
Retained at neutral at Citi; Price Target: $28.00
Downgraded to neutral from positive at E&P; Price Target: $31.50 from $33.00
Retained at neutral at Jarden; Price Target: $29.15
Retained at overweight at JP Morgan; Price Target: $35.00
Retained at outperform at Macquarie; Price Target: $32.00
Retained at outperform at RBC Capital Markets; Price Target: $35.50
Retained at neutral at UBS; Price Target: $31.00
Domain Australia (DHG)
Downgraded to underweight from neutral at JP Morgan; Price Target: $3.10 from $3.25
Amotiv (AOV)
Downgraded to hold from outperform at CLSA; Price Target: $10.30 from $13.30
Scans
Carl has over 30-years investing experience, helping investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl has a passion for technical analysis and has taught his unique brand of price-action trend following to thousands of Aussie investors.
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