Evening Wrap: ASX 200 scrapes narrow win on rebounding resources, tech stocks, plus uranium's big day out

A rebound in Resources and Tech stocks helped the ASX 200 to a narrow win today.

Cettire (CTT), Red Hill Minerals (RHI), and the indominable Droneshield (DRO) were among the biggest winners, while Chalice Mining (CHN), Superloop (SLC) and Liontown Resources (LTR) were among the biggest losers.

Uranium stocks rallied sharply with few obvious catalysts.

For all this and much more...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 21.7 points higher at 7,739.9, 0.28% from its session low and just 0.05% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a narrow 138 to 124.

Seven of the eleven major ASX sectors rose today in only a moderately broad-based move higher. It was good to see Information Technology (XIJ) (+1.4%) bounce back, likely led by another record on the Nasdaq in the USA (see ChartWatch for the latest technical analysis on the Nasdaq).

Thankfully, Materials (XMJ) (+1.1%) also bounced back today. Base metals and iron ore prices are rebounding from their June lows (see ChartWatch for the latest technical analysis on iron ore). Fingers crossed prices can keep rallying because there are some super-beaten down stocks in this sector.

A reprieve for some of the super-beaten down stocks in the Materials sector

Real Estate Investment Trusts (XPJ) (+0.92%) also bounced, unwinding some of their steep losses from yesterday. Benchmark yields are little changed after the recent run up which has hobbled Aussie property stocks – so this may only be a stay of execution…

Bounce in Real Estate my only be a stay of execution…

The four that did it tough today were all pretty close together in terms of losses (approx. 0.3-0.5%). Utilities (XUJ) (-0.55%) and Financials (XFJ) (-0.36%) reprised their positions from yesterday at the bottom of the sector performance list. Possibly both the victims of their respective FY24 success as there appears to be a smidge of new FY rotation going on.

The only other major item of note for me was the bounce (there's that word again!) in ASX uranium stocks. The uranium price was flat overnight as far as I could tell and there wasn't a great deal of movement in their US counterparts. Oversold, perhaps. Some of them bouncing from their respective long term uptrend ribbons, perhaps (i.e., your guess is as good as mine)!

Uranium stocks performances today

ChartWatch

Nasdaq Composite Index

Q. What's wrong with the Nasdaq?

Ahhh, the Nasdaq. There's just so much wrong with it right now. 🤔

It's plagued by over-valuation, by the concentration of gains in just a few stocks like NVIDIA, by irrational behaviour of overly exuberant investors, by the stupidity / pervasive influence of passive funds who just buy for the sake of buying, and by false hopes the Fed will cut rates to save the US economy.

Or perhaps it's just a picture of excess demand and that means all one should do is be invested.

One of these two positions is probably going to turn out to be right. Personally, I'd go with the second and not worry one iota about the first.

But, of course, I will watch the price action carefully for signs the supply-side is gaining ascendancy and adjust my exposure accordingly. Rinse. Repeat.

(To answer the question: Absolutely NOTHING! 😁)

Iron Ore 62% CFR China Futures (Front month, back-adjusted) (SGX)

Not as bad as it looked last time...

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 24 June.

In that update, we were waiting to see whether demand-side or supply-side candles would appear in the all-important 94-99.20 demand zone. Curiously (for me anyway) we didn’t quite get all the way to the demand zone, bouncing from 101.95 instead – and with some very decent demand-side candles too.

The close above the 109 point of supply is impressive, as is the close above the dynamic supply of the short term trend ribbon. Both events occurred on the 1 July candle.

I note the lower shadow on the 2 July candle that dipped back into the short term trend ribbon. The high close in that candle suggests the short term trend ribbon is now offering dynamic support. This is an important delineator between short term downtrend and uptrend.

Today’s candle, still live, so far appears to be confirming the change of the short term trend back to up.

The long term trend, as evidenced by the dark pink long term trend ribbon, remains down. Coincidently, the dynamic supply of that long term downtrend ribbon is converging with the 114 point of supply.

A close above those key points of supply will be interesting, and with the right price action (rising peaks and rising troughs – preferably seeing the latter above the long term trend ribbon) would change the long term trend to up.

As always, black-bodied candles and or upward pointing shadows, and a return to falling peaks and falling troughs would indicate the supply side has reasserted its control.

Things are looking up for iron ore 🤞, but I’m not going to get ahead of things here. The best way to describe this chart is: Not as bad as it looked last time!

Economy

Today

• AUS Retail Sales June

  • +0.6% vs +0.3% forecast and +0.1% in May = Big beat!

  • WA led the spending splurge, up 1.3%

  • Food retailing rose 0.7% (+6.1% in liquor!), Household goods retailing rose 1.1%, Clothing, footwear and personal accessory retailing rose 1.6%, Department stores fell 0.9%

• CHN Caixin Services PMI June

  • 51.2 vs 53.4 forecast and 54.0 in May = Big miss!

  • Readings above 50 indicate expansion, so services sector still expanded, but at a slowing rate

Later this week

Wednesday

• 17:15 EUR Services PMIs Various June

Thursday

• 00:00 USA Services PMI June (52.5 forecast vs 53.8 in May)

• 04:00 USA FOMC June Meeting Minutes

• All Day USA July 4 Public Holiday - non trading day

Friday

• 22:30 Non-Farm Employment Change, Average Hourly Earnings m/m, Unemployment Rate June

  • +189K forecast vs +272K in May; +0.3% forecast vs +0.4% in May; 4.0% forecast vs 4.0% in May

Latest News

Interesting Movers

Trading higher

• +12.3% Cettire (CTT) - No news, rebound is small in the context of the massive fall that followed Cettire Confirms China Launch, Provides FY24 Update

• +11.4% Red Hill Minerals (RHI) - Special Dividend, rise is consistent with prevailing short and long term uptrends 🔎📈

• +8.2% Zip Co. (ZIP) - No news, initiated at positive at E&P, price target $1.81, rise is consistent with prevailing short and long term uptrends (check daily ChartWatch ASX Scans Lists - strongest uptrends!)🔎📈

• +6.9% Nuix (NXL) - No news, rise is consistent with prevailing short and long term uptrends (check daily ChartWatch ASX Scans Lists - strongest uptrends!) 🔎📈

• +6.8% Deep Yellow (DYL) - Continued positive response to yesterday's Deep Yellow Advances Tumas Project Financing, strong rally across most ASX uranium stocks today, closed back above long term uptrend ribbon / bouncing out of long term uptrend ribbon 🔎📈

• +6.3% Droneshield (DRO) - No news, rise is consistent with the most wonderful prevailing short and long term uptrends (check daily ChartWatch ASX Scans Lists - strongest uptrends!) 🔎📈

• +6.2% Botanix Pharmaceuticals (BOT) - No news, rise is consistent with prevailing short and long term uptrends (check daily ChartWatch ASX Scans Lists - strongest uptrends!) 🔎📈

• +6.1% Paladin Energy (PDN) - No news, strong rally across most ASX uranium stocks today 🤔

• +6.0% Stanmore Resources (SMR) - No news, rise is consistent with prevailing short and long term uptrends (check daily ChartWatch ASX Scans Lists - strongest uptrends!) 🔎📈

• +5.4% Vulcan Energy Resources (VUL) - No news, trying to continue its bounce off the long term uptrend ribbon 🔎📈

• +4.8% Boss Energy (BOE) - No news, strong rally across most ASX uranium stocks today 🤔

• +4.6% Lotus Resources (LOT) - No news, strong rally across most ASX uranium stocks today 🤔

Trading lower

• -19.5% Chalice Mining (CHN) - NEWS, fall is consistent with prevailing short and long term downtrends! 🔎📉

• -5.7% Superloop (SLC) - NEWS, also several broker moves, see Broker Notes section below

• -4.7% Liontown Resources (LTR) - Fall out from yesterday's NEWS, fall is consistent with prevailing short and long term downtrends (check daily ChartWatch ASX Scans Lists - strongest downtrends!) 🔎📉

• -3.8% Monadelphous Group (MND) - No news, fall is consistent with prevailing short and long term downtrends (check daily ChartWatch ASX Scans Lists - strongest downtrends!) 🔎📉

• -2.7% Seek (SEK) - No news, fall is consistent with prevailing short and long term downtrends (check daily ChartWatch ASX Scans Lists - strongest downtrends!) 🔎📉

Broker Notes

Adore Beauty Group (ABY)

• Retained at buy at Citi; Price Target: $1.50 from $1.70

Acrow (ACF)

• Retained at buy at Shaw and Partners; Price Target: $1.35

Altium (ALU)

• Retained at hold at Bell Potter; Price Target: $68.50 from $66.75

ANZ Group (ANZ)

• Retained at buy at Goldman Sachs; Price Target: $28.00

Australian Vanadium (AVL)

• Retained at buy at Shaw and Partners; Price Target: $0.08

Bendigo and Adelaide Bank (BEN)

• Retained at sell at Citi; Price Target: $9.50

BHP Group (BHP)

• Retained at buy at Goldman Sachs; Price Target: $48.40 from $49.00

Challenger (CGF)

• Retained at buy at Goldman Sachs; Price Target: $7.50

Charter Hall Group US Prohibited (CHC)

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

Coronado Global Resources (CRN)

• Retained at buy at Goldman Sachs; Price Target: $1.70 from $1.55

Cygnus Metals (CY5)

• Retained at buy at Shaw and Partners; Price Target: $0.30 from $0.50

Deterra Royalties (DRR)

• Upgraded to buy from neutral at Goldman Sachs; Price Target: $4.70 from $5.00

Fortescue (FMG)

• Retained at sell at Goldman Sachs; Price Target: $16.20 from $16.90

G8 Education (GEM)

• Upgraded to outperform from neutral at Macquarie; Price Target: $1.35 from $1.26

Light & Wonder (LNW)

• Initiated at buy at Bank of America; Price Target: $183.00

Liontown Resources (LTR)

• Retained at buy at Bell Potter; Price Target: $1.85

• Upgraded to neutral from sell at Citi; Price Target: $1.00

Monadelphous Group (MND)

• Downgraded to hold from buy at Bell Potter; Price Target: $14.00 from $15.40

New Hope Corporation (NHC)

• Retained at sell at Goldman Sachs; Price Target: $3.90 from $3.60

Rio Tinto (RIO)

• Retained at buy at Goldman Sachs; Price Target: $137.00 from $138.90

• Retained at overweight at Morgan Stanley; Price Target: $142.00

South32 (S32)

• Retained at buy at Goldman Sachs; Price Target: $4.30 from $4.00

Sandfire Resources (SFR)

• Retained at neutral at Goldman Sachs; Price Target: $8.70 from $8.20

Superloop (SLC)

• Retained at overweight at JP Morgan; Price Target: $1.90 from $1.60

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

• Retained at overweight at Wilsons; Price Target: $1.61

Tuas (TUA)

• Retained at buy at Citi; Price Target: $5.25 from $4.50

WA1 Resources (WA1)

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

Westpac Banking Corporation (WBC)

• Retained at sell at Goldman Sachs; Price Target: $24.10

Whitehaven Coal (WHC)

• Retained at neutral at Goldman Sachs; Price Target: $8.10 from $7.40

Zip Co. (ZIP)

• Initiated at positive at E&P; Price Target: $1.81

Scans