Evening Wrap: ASX 200 recoups most of correction fall as energy and resources stocks surge, uranium, copper, lithium best

The S&P/ASX 200 closed 105.6 points higher, up 1.34%.

105 points to the better. Recouping all, and then some of last week's losses.

Hey' we're not back at record highs, but another couple of sessions like today and we will be. It's almost as if the correction last week and the week before never happened.

But it did. And that's more than just a bit annoying! 😠

Anyways, let's let bygones be bygones and bask in the glory of today's massive gain – a again that for once featured Energy and Resources stocks.

If you're one who has deliberately refused to check the stocks in your portfolio from those sectors for about 3 months now...you might want to take a little sneaky peaky tonight – especially if you own uranium, lithium and copper stocks! 🧐

On that cheery note...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 105.6 points higher at 7,971.1, 1.34% from its session low and just 0.07% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an overwhelming 222 to 49.

For the week, the XJO finished up 193.4 points or 2.49% higher, smack bang on its weekly high. It also more than made up for last week’s bruising losses – which might leave a few of you (and me) wondering what all the fuss was about!? It’s like nothing happened! (But it did, and that's gotta tick you (and me) off more than just a little!)

Anyways, finally I have some Evening Wrap good news for investors in Energy (XEJ) (+2.2%) and Resources (XJR) (+2.2%) stocks! These were the two best and standout performers today among a cohort of major ASX sectors which all closed in the black.

There were three clear areas of standouts across the two sectors: Uranium, Lithium, and Copper. Copper is easy enough to explain, copper prices were up over 1% on Thursday (see ChartWatch below for full technical analysis).

Uranium and lithium prices have barely budged – so don't look there for possible answers to why so many stocks interested in these two commodities did so well today. Certainly, for lithium there's the Pilbara Minerals (PLS) vs Latin Resources (LRS) takeover. It might be highlighting other small / similar lithium companies as potential targets for bigger fish out there in lithium land.

Uranium? Like for many energy and resources stocks...perhaps one could play the "oversold" card? (FYI, I hate that term as an excuse for why a beaten down stock has finally bounced!)

The best of the bouncers today!

Also doing well today was the Financials (XFJ) (+1.6%) sector (interestingly, in what appeared to be such a great day on the local stock market, just these three: XEJ, XJR, and XFJ outperformed the benchmark today 🤔).

You wouldn't say any particular sector did it tough, but yesterday’s two weakest sectors (not including the XEJ and XJR!) were notably also down the bottom of the sector performance pile today – Utilities (XUJ) (+0.67%) and Real Estate Investment Trusts (XPJ) (+0.07%).

ChartWatch

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

An interesting chart

The last time we covered high grade copper was in ChartWatch in the Evening Wrap on 8 August 2024.

In that update, we challenged it to produce some substantial demand-side candles immediately at the 3.94-4.00 site of the 2024 break out – or face even deeper falls.

To high grade copper’s credit. It did. As in, we haven’t really seen much of a backward step since the 8 August candle. Even better, the relatively long white-bodied candles of 12 and 15 August demonstrate the return of some motivated demand – if only in terms of the price that demand is prepared to pay.

Checking the lack of volume since the low, I propose we have not seen greater demand-side motivation with respect to size of orders. More likely, the supply-side has taken a breather allowing speculative demand to have a greater impact on the price.

It’s still a positive, and it is encouraging we are now encroaching on key dynamic zones of supply in the form of the short term downtrend ribbon and long term trend ribbon.

We don’t want to see the fingerprints of supply emerging here – these being black-bodied candles and or upward pointing shadows. If we do, this fledgling rally could be over soon after it’s begun. 4.224 will also likely offer stiff supply.

We do want to see continued demand-side candles – these being white-bodied candles and or downward pointing shadows. If we do, then it would demonstrate there isn’t any supply in those supply zones!

Ultimately, I’d need to see a push to 4.32, followed by a test and hold of 4.224 as demand (all with some nice candles) to call us out of the woods here. But, copper is definitely looking much better than it did last time we checked up on it.

Newcastle Coal Futures (Front month, back-adjusted) ICE

An interesting chart

The last time we covered thermal coal was in ChartWatch in the Evening Wrap on 9 August 2024.

In that update, I noted some “tentative signs of life” developing in the long term technical picture. We talked about how long term trends transition from down, to neutral, to up. For me it’s particularly important to see how the price action plays out around the long term trend ribbon – I want to see that transition from offering dynamic supply to dynamic demand.

Dynamic supply in the long term (down)trend ribbon manifests itself as peaks and rallies getting killed. Dynamic demand in the long term (at least neutral) trend ribbon manifests itself as troughs and rallies getting supported.

Anyways, long story short, I note the formation of a trough a the top of the long term trend ribbon, which has neutralised. I also note some decent volume to go with it – potentially signalling greater demand-side interest and supply removal.

Clearly, the fledgling short term uptrend is relatively flat compared to the corresponding short term downtrend that started the bear market back in early 2023 – there’s still work to be done here to really prove thermal coal is beginning a new long term uptrend.

I will leave it there for now and simply note the signs are increasingly positive. Continued risking peaks and rising troughs, particularly if we can get some separation between them – some steepness in that short term uptrend to indicate growing demand-side interest and desperation – we will have our confirmation.

Economy

Today

• There weren't any major data releases in our time zone today (+0% actual vs +% forecast vs +% previous)

Later this week

Saturday

• 00:00 USA University of Michigan Consumer Sentiment Index August (66.7 forecast vs 66.4 July)

Latest News

Interesting Movers

Trading higher

• +21.0% Appen (APX) - No news, it has enjoyed a significant re-rating since 30 July Q2 FY24 Quarterly Activity Report and Appendix 4C, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up (a new entrant to ChartWatch ASX Scans Uptrends list just a couple of days ago!) 🔎📈

• +13.5% Zip Co. (ZIP) - No news, rise is consistent with rising short and long term uptrends (a ChartWatch ASX Scans Uptrends list regular!) 🔎📈

• +9.6% Wildcat Resources (WC8) - No news, but quite likely renewed interest as a potential takeover target following PLS's move on LRS this week

• +8.9% Opthea (OPT) - No news

• +8.4% Adriatic Metals (ADT) - No news

• +8.3% Sayona Mining (SYA) - No news, probably ditto with WC8

• +6.2% James Hardie Industries (JHX) - Update - Notification of buy-back - JHX

• +6.1% Sandfire Resources (SFR) - No news, bouncing copper price (see ChartWatch section above)

• +6.0% Firefly Metals (FFM) - Ditto SFR, rise is consistent with prevailing long term uptrend 🔎📈

• +5.8% Pilbara Minerals (PLS) - No news since yesterday's Pilbara Minerals to acquire Latin Resources, but plenty of broker stuff going on - see Broker Notes section below

• +5.7% Perenti (PRN) - No news, but possible some positive rub off from NWH results and move yesterday

• +5.5% Boss Energy (BOE) - No news, generally a modest bounce for most ASX uranium stocks, nothing doing in the uranium price, US counterparts were higher Thursday

• +5.5% Deep Yellow (DYL) - Ditto BOE

• +5.4% Netwealth Group (NWL) - Continued positive response to 13 August 2024 Full Year Results Presentation, and subsequent positive broker moves (see various Broker Notes sections last few days)

• +5.4% Droneshield (DRO) - No news, customary volatility!

• +5.2% Audinate Group (AD8) - Change in substantial holding (increase)

• +5.2% Arcadium Lithium (LTM) - No news, tracked US lithium stocks, lithium futures are edging higher today in China…but none of this likely enough to explain this pop today…"oversold" like anything else that bounced for no good reason today anyone!? 🤔

Trading lower

• -41.9% Silver Mines (SVL) - Bowdens Silver Project Appeal Proceedings Outcome, fall is consistent with rising short and long term downtrends 🔎📉

• -15.7% Power (PWH) - Appendix 4E and 2024 Annual Report and PWR FY2024 Investor Presentation

• -4.3% Clarity Pharmaceuticals (CU6) - Notification regarding unquoted securities

• -2.8% GQG Partners (GQG) - Appendix 4D and Half-Year Report and Investor Presentation - Half-Year ended 30 June 2024

• -2.8% Amcor (AMC) - Form 8-K - FY24 Results

• -2.8% Strike Energy (STX) - No news, fall is consistent with rising short and long term downtrends 🔎📉

• -2.6% Domain Australia (DHG) - Domain FY24 Results and Domain FY24 Investor Presentation fall is consistent with rising short and long term downtrends 🔎📉

• -2.4% Cochlear (COH) - Continued negative response to yesterday's FY24 Result - Presentation, also several negative broker notes including price target cuts (see Broker Notes section below)

Broker Notes

AGL Energy (AGL)

• Retained at neutral at Goldman Sachs; Price Target: $11.30 from $10.40

• Upgraded to buy from accumulate at Ord Minnett; Price Target: $13.70 from $11.50

Air New Zealand (AIZ)

• Retained at outperform at Macquarie; Price Target: NZ$0.72 from NZ$0.75

Aristocrat Leisure (ALL)

• Retained at neutral at Goldman Sachs; Price Target: $55.30

Amcor (AMC)

• Retained at neutral at UBS; Price Target: $15.60

Amotiv (AOV)

• Retained at buy at Goldman Sachs; Price Target: $13.00

Aspen Group (APZ)

• Retained at buy at Bell Potter; Price Target: $2.40 from $2.30

Arena Reit. (ARF)

• Downgraded to hold from outperform at CLSA; Price Target: $4.03 from $3.87

• Retained at outperform at Macquarie; Price Target: $4.15 from $4.02

ASX (ASX)

• Retained at sell at UBS; Price Target: $55.00

American West Metals (AW1)

• Retained at buy at Shaw and Partners; Price Target: $0.32

Commonwealth Bank of Australia (CBA)

• Retained at sell at Citi; Price Target: $91.50 from $85.00

• Retained at sell at Goldman Sachs; Price Target: $94.80 from $91.75

Centuria Office Reit (COF)

• Retained at underweight at Morgan Stanley; Price Target: $1.40

• Downgraded to sell from neutral at UBS; Price Target: $1.10 from $1.19

Cochlear (COH)

• Retained at sell at Citi; Price Target: $255.00 from $265.00

• Retained at neutral at JP Morgan; Price Target: $300.00 from $305.00

• Retained at underperform at Macquarie; Price Target: $283.00 from $300.00

• Retained at hold at Morgans; Price Target: $300.02 from $290.50

• Retained at sector perform at RBC Capital Markets; Price Target: $280.00 from $286.00

• Retained at sell at UBS; Price Target: $270.00

Computershare (CPU)

• Retained at buy at Goldman Sachs; Price Target: $31.00 from $29.50

Charter Hall Retail Reit (CQR)

• Retained at buy at Citi; Price Target: $4.00

Domain Australia (DHG)

• Retained at buy at Citi; Price Target: $3.40

• Retained at neutral at Macquarie; Price Target: $3.30

• Retained at neutral at UBS; Price Target: $3.60

Dexus Industria Reit. (DXI)

• Retained at add at Morgans; Price Target: $3.16 from $3.20

Evolution Mining (EVN)

• Retained at buy at Goldman Sachs; Price Target: $4.05 from $4.15

Fortescue (FMG)

• Upgraded to buy from neutral at Citi; Price Target: $21.00 from $23.50

Goodman Group (GMG)

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

• Retained at neutral at Macquarie; Price Target: $36.47 from $36.51

• Retained at overweight at Morgan Stanley; Price Target: $38.05 from $35.65

• Retained at hold at Morgans; Price Target: $36.50 from $33.50

• Retained at sell at UBS; Price Target: $32.10 from $31.71

GQG Partners (GQG)

• Initiated at overweight at JP Morgan; Price Target: $3.10

• Retained at outperform at Macquarie; Price Target: $3.05

• Retained at buy at UBS; Price Target: $3.25

Homeco Daily Needs Reit (HDN)

• Retained at hold at Bell Potter; Price Target: $1.35 from $1.30

Lifestyle Communities (LIC)

• Retained at buy at Goldman Sachs; Price Target: $11.30 from $12.00

Light & Wonder (LNW)

• Retained at buy at Goldman Sachs; Price Target: $190.00

Latin Resources (LRS)

• Downgraded to hold from buy at Bell Potter; Price Target: $0.23 from $0.40

• Downgraded to hold from buy at Canaccord Genuity; Price Target: $0.19 from $0.60

Magellan Financial Group (MFG)

• Retained at underweight at Macquarie; Price Target: $9.45 from $8.20

• Retained at underweight at Morgan Stanley; Price Target: $8.50

• Retained at hold at Morgans; Price Target: $11.44 from $9.99

• Downgraded to neutral from buy at UBS; Price Target: $10.80 from $10.50

• Magellan Global Fund (MGF) retained at neutral at Goldman Sachs; Price Target: $10.00 from $9.50

National Australia Bank (NAB)

• Retained at sell at Citi; Price Target: $26.50

• Retained at sell at UBS; Price Target: $32.00

Nufarm (NUF)

• Retained at hold at Bell Potter; Price Target: $4.05 from $5.10

• Retained at neutral at Macquarie; Price Target: $4.00 from $5.10

• Retained at equal-weight at Morgan Stanley; Price Target: $4.00 from $5.00

• Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $4.75

• Downgraded to neutral from buy at UBS; Price Target: $4.50 from $6.90

NRW (NWH)

• Retained at buy at Citi; Price Target: $4.05 from $3.65

• Upgraded to buy from overweight at Jarden; Price Target: $3.85 from $3.20

• Retained at neutral at Macquarie; Price Target: $3.37 from $2.70

• Retained at buy at UBS; Price Target: $3.80 from $3.50

Netwealth Group (NWL)

• Retained at overweight at Morgan Stanley; Price Target: $23.50 from $24.00

Orora (ORA)

• Retained at buy at Goldman Sachs; Price Target: $2.75 from $2.70

Origin Energy (ORG)

• Retained at buy at Citi; Price Target: $11.00 from $11.50

• Retained at buy at Goldman Sachs; Price Target: $10.75 from $11.25

• Retained at neutral at JP Morgan; Price Target: $10.40 from $10.80

• Downgraded to neutral from outperform at Macquarie; Price Target: $10.12 from $10.74

• Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $8.86 from $10.00

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

• Retained at buy at UBS; Price Target: $11.70 from $12.10

Pilbara Minerals (PLS)

• Retained at hold at Bell Potter; Price Target: $3.15 from $3.30

• Retained at neutral at Citi; Price Target: $2.90

• Retained at underweight at Morgan Stanley; Price Target: $2.70

• Retained at add at Morgans; Price Target: $3.40

• Retained at sell at UBS; Price Target: $2.50

Pro Medicus (PME)

• Retained at buy at Goldman Sachs; Price Target: $149.00 from $147.50

Power (PWH)

• Retained at buy at Goldman Sachs; Price Target: $13.40

REA Group (REA)

• Retained at overweight at Morgan Stanley; Price Target: $230.00 from $220.00

Telstra Group (TLS)

• Retained at buy at Bell Potter; Price Target: $4.30 from $4.20

• Retained at positive at E&P; Price Target: $4.50

• Retained at buy at Goldman Sachs; Price Target: $4.35 from $4.30

• Downgraded to overweight from buy at Jarden; Price Target: $4.20

• Retained at hold at Jefferies; Price Target: $4.30 from $4.20

• Retained at overweight at JP Morgan; Price Target: $4.50 from $4.30

• Retained at outperform at Macquarie; Price Target: $4.30

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

• Retained at reduce at Morgans; Price Target: $3.20 from $3.00

• Retained at buy at Ord Minnett; Price Target: $4.50

• Retained at buy at UBS; Price Target: $4.40

Treasury Wine Estates (TWE)

• Retained at neutral at Citi; Price Target: $12.97 from $13.00

• Retained at buy at Goldman Sachs; Price Target: $15.20 from $14.70

• Retained at buy at Jarden; Price Target: $14.20 from $14.60

• Retained at buy at Jefferies; Price Target: $15.50 from $16.00

• Retained at outperform at Macquarie; Price Target: $13.90 from $14.00

• Retained at overweight at Morgan Stanley; Price Target: $14.60

• Retained at add at Morgans; Price Target: $14.80 from $15.03

• Retained at buy at UBS; Price Target: $14.00 from $14.50

Woodside Energy Group (WDS)

• Retained at outperform at Macquarie; Price Target: $33.00 from $32.00

• Retained at neutral at UBS; Price Target: $31.00

Scans