Evening Wrap: ASX 200 sneaks another gain as Coles' result beats, gravity catches up with Brainchip

The benchmark S&P/ASX 200 once again snuck into positive territory, and again the lack of movement in the aggregate belied substantial earnings-related moves below the surface.

Today's earnings winners included Coles Group (COL), Reece (REH), G8 Education (GEM), and Helia Group (HLI).

Losers included recent tech high-flyer Brainchip Holdings (BRN) which came back to earth with a thud after the release of its 2023 Full Year Results, and fellow turnaround play Zip Co (ZIP), which also fell sharply as its results disappointed.

Let’s dive in!

Markets

ASX 200 Session Chart

The S&P/ASX200 (XJO) finished 10.2 points higher at 7,663.0, 0.69% from its session low and just 0.02% from its high. Despite the seemingly bullish close on the benchmark, under the surface in the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a disturbing 105 to 163.

The Consumer Staples (XSJ) (+2.15%) sector was the best performing sector today, likely in response to a strong move in Coles Group (COL) (+5.48%) as it reported better than expected first half FY24 results.

A big bounce in Endeavour Group (EDV) (+5.12%) also helped. It was down around 3.5% yesterday on its results, but notably several brokers retained their buy / overweight / outperform ratings on the stock (see Broker Moves).

Also doing well today was the Information Technology (XIJ) (+1.26%) sector. It's been the pick of the sectors lately, so today's strong performance is no surprise, but most of today's gain was likely due to another 7% gain in sector heavyweight Wisetech Global (WTC).

Doing it tough today was the Real Estate Investment Trusts (XPJ) (-0.89%) sector. It was a broad-based move, but again post-results moves featured, this time from Waypoint REIT (WPR) (-3.27%).

ChartWatch

Reece (ASX: REH)

The Reece chart shows signs of strong excess demand

A couple of earnings moves in focus in today's ChartWatch. Firstly, today's biggest winner, Reece (REH).

Nothing is guaranteed in markets, and certainly not in technical analysis. But good technical analysis is about playing the odds. And in my experience the odds tend to lie with following the trend.

This means trying to find charts just like Reece looked before today's massive pop (and after, but I'll discuss that later!).

Strong and accelerating short and long term trends (double-green on my trend ribbons), rising peaks and rising troughs demonstrating supply removal and buy the dip activity respectively, and predominantly white candles demonstrating the influence of programmed buy orders. In short: signs of excess demand for the company's shares.

Using this methodology won't work all the time. No doubt you're already thinking of an example to disprove my theory! But deep down, I expect you also know the stocks you find it hardest to buy (because they look like they've gone up too much) tend to do the best. Or is this just because you didn't get in!

On the topic of "and after" mentioned above, everything I look for remains prevalent in this chart.

ZIP Co (ASX: ZIP)

Zip also looked to be demonstrating excess demand, until today

Zip is here by no coincidence. I deliberately wanted to show you a chart I would have happily owned yesterday. I would have taken a licking today after what was clearly a disappointing earnings release.

Taking a loss, or giving back some profits, is part and parcel of a technical analysts' existence! The future is unknown, and as good as a set of techincals may look on Monday, they could be mud on Tuesday!

One of my trading mentors told me: "Carl, taking a loss is like eating breakfast. Do you remember what you had for breakfast? Just eat your breakfast and move on!".

Today's long black candle on Zip is about as clear a showing the supply-side has swept in and regained control of what was until yesterday a promising demand-side environment. The fact Zip closed below the 20 Feb trough low of $0.805 is even more disturbing. It suggests demand is in full retreat.

I know many of my followers were likely long Zip today, having entered on the trend change in December or January. So, whilst I expect many were only giving back profits, I have no doubt they took steps to manage their risk today, as they too have been taught to eat their breakfast and move on!

Economy

Today

• No major economic announcements today!

Later this week

• Tuesday

  • USA: New Home Sales (680k forecast vs 664k previous)

• Wednesday

  • USA: Durable Goods Orders (-4.7% forecast vs 0.0% previous & Core +0.2% forecast and 0.5% previous)

  • USA: CB Consumer Confidence (114.8 forecast vs 114.8 previous)

  • AU: Consumer Price Index CPI (+3.6% p.a. forecast vs +3.4% p.a. previous)

• Thursday

  • USA: Prelim GDP December quarter (+3.3% p.a. forecast vs 3.3% p.a. previous)

  • AU: Retail Sales January (forecast +1.6% vs -2.7% previous)

• Friday

  • USA: Core PCE Price Index January (+0.4% forecast vs +0.2% previous)

  • CHN: Manufacturing PMI (49.1 forecast vs 49.2 previous) and Non-Manufacturing PMI (50.7 forecast vs 50.7 previous)

  • CHN: Caixin Manufacturing PMI (50.7 forecast vs 50.8 previous)

  • EU: Eurozone Core Consumer Price Index CPI (+2.9% p.a. forecast vs +3.3% p.a. previous)

• Saturday

  • USA: ISM Manufacturing PMI (49.5 forecast vs 49.1 previous)

Latest News

Interesting Movers

Trading higher

• +18.3% Reece (REH) - Half Yearly Report and Accounts, rise is consistent with prevailing short and long term uptrends

• +11.6% G8 Education (GEM) - Full Year Report and Accounts, rise is consistent with prevailing short and long term uptrends

• +7.8% Helia Group (HLI) - Full Year Report and Accounts, rise is consistent with prevailing long term uptrend

• +7.0% Wisetech Global (WTC) - No news, likely continued positive response to 21 Feb Half Yearly Report and Accounts, rise is consistent with prevailing short and long term uptrends

• +6.8% Telix Pharmaceuticals (TLX) - Telix to Acquire IsoTherapeutics (US R&D and Manufacturing), rise is consistent with prevailing long term uptrend

• +5.8% Mayne Pharma Group (MYX) - Continued positive response to yesterday's Half Yearly Report and Accounts, rise is consistent with prevailing short and long term uptrends

• +5.6% Objective Corporation (OCL) - Continued positive response to 22 Feb Half Yearly Report and Accounts, rise is consistent with prevailing short and long term uptrends

• +5.5% Coles Group (COL) - Half Yearly Report and Accounts

• +5.1% Endeavour Group (EDV) - Retained at BUY/OUTPERFORM/OVERWEIGHT at several brokers following yesterday's sharp sell off on release of co's Half Yearly Report and Accounts

• +5.0% CSR (CSR) - Continues to converge on takeover bid price from Saint-Gobain

• +4.7% Chrysos Corporation (C79) - No news, bouncing off long term uptrend ribbon

• +4.6% Lotus Resources (LOT) - No news, a few uranium stocks bounced today

• +4.4% Maas Group Holdings (MGH) - No news, rise is consistent with prevailing short and long term uptrends

• +4.2% Nanosonics (NAN) - Modest bounce following yesterday's sharp sell off on release of co's Half Yearly Report and Accounts

• +4.0% Myer Holdings (MYR) - No news, rise is consistent with prevailing short and long term uptrends

• +4.0% Paladin Energy (PDN) - No news, a few uranium stocks bounced today

• +4.0% Capricorn Metals (CMM) - Half Yearly Report and Accounts, bounced off long term uptrend ribbon

• +3.0% Kogan.Com (KGN) - Continued positive response to yesterday's Half Yearly Report and Accounts, rise is consistent with prevailing short and long term uptrends

Trading lower

• -34.7% Brainchip Holdings (BRN) - Gravity…and 2023 Full Year Results

• -14.4% Zip Co (ZIP) - Half Yearly Report and Accounts

• -13.2% Johns Lyng Group (JLG) - Half Yearly Report and Accounts

• -11.9% Weebit Nano (WBT) - Half Yearly Report and Accounts (appears influenced by BRN moves lately?)

• -10.0% Tyro Payments (TYR) - Half Yearly Report and Accounts

• -8.7% Healius (HLS) - Half Yearly Report and Accounts, fall is consistent with prevailing short and long term downtrends

• -8.1% Integral Diagnostics (IDX) - No news, has enjoyed a substantial rally post-H1 FY24 results, pullback

• -6.5% Australian Clinical Labs (ACL) - No news, fall is consistent with prevailing short and long term downtrends

• -6.0% Australian Agricultural Company (AAC) - No news, fall is consistent with prevailing short and long term downtrends

• -5.0% Alumina (AWC) - 2023 Full Year Result

• -5.0% Westgold Resources (WGX) - Ceasing to be a substantial holder from MUFG

• -4.9% Block (SQ2) - No news, has enjoyed a substantial rally post-Q4 results, pullback

• -4.5% Iluka Resources (ILU) - No news, fall is consistent with prevailing short and long term downtrends

Broker Notes

• Adore Beauty Group (ABY) retained at equalweight at Morgan Stanley; Price Target: $1.15

• Adairs (ADH)

  • Retained at hold at Canaccord Genuity; Price Target: $2.14 from $1.40

  • Upgraded to add from hold at Morgans; Price Target: $2.40 from $1.70

  • Retained at hold at Ord Minnett; Price Target: $2.00 from $1.60

  • Retained at neutral at UBS; Price Target: $2.20 from $1.65

  • Upgraded to market-weight from underweight at Wilsons; Price Target: $2.00 from $1.10

• Altium (ALU) retained at neutral at UBS; Price Target: $40.60

• Atturra (ATA) retained at buy at Shaw and Partners; Price Target: $1.40 from $1.45

• Alumina (AWC)

  • Retained at buy at Goldman Sachs; Price Target: $1.39

  • Retained at overweight at Morgan Stanley; Price Target: $1.10

• Accent Group (AX1) retained at buy at Bell Potter; Price Target: $2.50 from $2.35

• Beforepay Group (B4P) retained at buy at Shaw and Partners; Price Target: $1.00

• Bubs Australia (BUB) retained at hold at Bell Potter; Price Target: $0.14

• Close The Loop (CLG) retained at buy at Shaw and Partners; Price Target: $0.70

• COG Financial Services (COG) retained at buy at Bell Potter; Price Target: $1.84 from $1.83

• Coles Group (COL) retained at neutral at UBS; Price Target: $16.25

• CSR (CSR) retained at neutral at Macquarie; Price Target: $9.00 from $6.60

• Corporate Travel Management (CTD) retained at neutral at Goldman Sachs; Price Target: $17.80 from $20.70

• Calix (CXL) retained at buy at Bell Potter; Price Target: $5.10

• Cygnus Metals (CY5) retained at buy at Shaw and Partners; Price Target: $0.50

• Dalrymple Bay Infrastructure (DBI)

  • Retained at buy at Citi; Price Target: $3.00

  • Downgraded to hold from buy at Jefferies; Price Target: $2.82 from $2.66

• Endeavour Group (EDV)

  • Retained at neutral at Barrenjoey; Price Target: $5.30 from $5.40

  • Retained at outperform at CLSA; Price Target: $5.85 from $5.55

  • Retained at buy at Goldman Sachs; Price Target: $6.20 from $6.40

  • Retained at overweight at JP Morgan; Price Target: $6.10 from $6.20

  • Retained at outperform at Macquarie; Price Target: $5.60 from $5.75

  • Retained at equalweight at Morgan Stanley; Price Target: $5.80

  • Retained at hold at Morgans; Price Target: $5.20 from $5.15

  • Retained at buy at UBS; Price Target: $6.00

• Fortescue (FMG) retained at sell at Ord Minnett; Price Target: $17.30

• G8 Education (GEM) retained at neutral at UBS; Price Target: $1.15

• Growthpoint Properties Australia (GOZ) retained at buy at Ord Minnett; Price Target: $3.80

• Insurance Australia Group (IAG) retained at outperform at Macquarie; Price Target: $6.40

• IVE Group (IGL) retained at buy at Bell Potter; Price Target: $2.65

• IPD Group (IPG)

  • Retained at buy at Bell Potter; Price Target: $5.90

  • Retained at buy at Shaw and Partners; Price Target: $5.50 from $5.35

• Kogan.Com (KGN)

  • Retained at sell at Citi; Price Target: $5.50 from $4.30

  • Upgraded to neutral from underweight at Jarden; Price Target: $7.50 from $4.90

  • Retained at accumulate at Ord Minnett; Price Target: $10.70

• Lindsay Australia (LAU)

  • Retained at buy at Ord Minnett; Price Target: $1.52 from $1.53

  • Retained at buy at Shaw and Partners; Price Target: $1.50 from $1.60

• Liberty Financial Group (LFG)

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

  • Retained at neutral at Macquarie; Price Target: $4.30 from $3.65

• Latitude Group Holdings (LFS) upgraded to neutral from sell at Citi; Price Target: $1.15 from $0.95

• Arcadium Lithium (LTM) retained at outperform at Macquarie; Price Target: $11.00

• Lynas Rare Earths (LYC)

  • Retained at buy at Bell Potter; Price Target: $7.20 from $7.60

  • Retained at neutral at Citi; Price Target: $6.70

  • Retained at buy at Goldman Sachs; Price Target: $7.40 from $7.20

  • Downgraded to neutral from overweight at JPMorgan; Price Target: $6.90 from $7.40

  • Retained at outperform at Macquarie; Price Target: $7.00

• Michael Hill International (MHJ)

  • Upgraded to buy from neutral at Citi; Price Target: $0.92 from $0.86

  • Retained at positive at E&P; Price Target: $1.10 from $1.20

  • Retained at overweight at Jarden; Price Target: $1.05 from $1.10

  • Retained at outperform at Macquarie; Price Target: $1.05 from $1.10

• Mayne Pharma Group (MYX) upgraded to buy from hold at Canaccord Genuity; Price Target: $6.69 from $3.80

• Nanosonics (NAN)

  • Retained at hold at Bell Potter; Price Target: $3.00 from $3.20

  • Retained at sell at Citi; Price Target: $2.70 from $3.90

  • Upgraded to neutral from underweight at JPMorgan; Price Target: $2.80 from $3.40

  • Retained at accumulate at Ord Minnett; Price Target: $4.00

• Newmont Corporation (NEM)

  • Retained at outperform at Macquarie; Price Target: $67.00 from $69.00

  • Retained at buy at Ord Minnett; Price Target: $76.00

• NIB Holdings (NHF)

  • Retained at buy at Citi; Price Target: $8.60 from $8.35

  • Retained at buy at Goldman Sachs; Price Target: $8.10

  • Retained at neutral at Macquarie; Price Target: $7.30 from $7.70

  • Retained at equalweight at Morgan Stanley; Price Target: $7.35 from $8.15

• Nexted Group (NXD)

  • Retained at buy at Bell Potter; Price Target: $0.80 from $1.05

  • Retained at buy at Ord Minnett; Price Target: $0.85 from $1.12

• Pointsbet Holdings (PBH)

  • Retained at buy at Bell Potter; Price Target: $1.08

  • Upgraded to buy from hold at Jefferies; Price Target: $1.10 from $1.01

  • Retained at buy at Ord Minnett; Price Target: $1.05

• PeopleIn (PPE)

  • Downgraded to hold from add at Morgans; Price Target: $1.05 from $1.85

  • Retained at buy at Ord Minnett; Price Target: $1.67 from $2.09

• Perseus Mining (PRU) retained at outperform at Macquarie; Price Target: $2.60

• Pexa Group (PXA)

  • Retained at overweight at Morgan Stanley; Price Target: $14.00

  • Retained at accumulate at Ord Minnett; Price Target: $17.25 from $15.00

• Regis Healthcare (REG)

  • Retained at outperform at Macquarie; Price Target: $3.85 from $3.55

  • Retained at buy at Ord Minnett; Price Target: $3.90 from $3.50

  • Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $3.45 from $3.90

• Reece (REH) retained at sell at UBS; Price Target: $16.60

• Regal Partners (RPL) retained at buy at Bell Potter; Price Target: $3.86 from $3.25

• Siteminder (SDR) retained at buy at UBS; Price Target: $6.55

• Stanmore Resources (SMR) retained at buy at Ord Minnett; Price Target: $4.30

• Shaver Shop Group (SSG) retained at hold at Ord Minnett; Price Target: $1.20 from $1.05

• Suncorp Group (SUN)

  • Downgraded to neutral from buy at Citi; Price Target: $16.60 from $15.55

  • Retained at buy at Goldman Sachs; Price Target: $16.25 from $15.00

  • Downgraded to hold from buy at Jefferies; Price Target: $16.17 from $15.80

  • Retained at outperform at Macquarie; Price Target: $17.00

  • Retained at overweight at Morgan Stanley; Price Target: $16.17 from $15.80

  • Retained at add at Morgans; Price Target: $16.88 from $16.42

  • Retained at buy at UBS; Price Target: $16.80

• Tamboran Resources Corporation (TBN)

  • Retained at outperform at Macquarie; Price Target: $0.40 from $0.36

  • Retained at buy at Shaw and Partners; Price Target: $0.37

• TPG Telecom (TPG)

  • Retained at neutral at E&P; Price Target: $5.00 from $5.30

  • Retained at neutral at Goldman Sachs; Price Target: $5.40 from $5.70

  • Downgraded to overweight from buy at Jarden; Price Target: $5.30 from $5.80

  • Retained at hold at Jefferies; Price Target: $5.12 from $5.21

  • Downgraded to neutral from outperform at Macquarie; Price Target: $5.10 from $5.40

  • Retained at underweight at Morgan Stanley; Price Target: $4.40

  • Downgraded to hold from add at Morgans; Price Target: $5.10 from $5.50

  • Retained at accumulate at Ord Minnett; Price Target: $6.60 from $7.40

  • Retained at neutral at UBS; Price Target: $4.95 from $5.45

• Tyro Payments (TYR) retained at buy at UBS; Price Target: $1.65

• Woodside Energy Group (WDS)

  • Retained at sell at Citi; Price Target: $26.00 from $27.00

  • Retained at neutral at UBS; Price Target: $31.40

• Waypoint REIT (WPR)

  • Retained at underweight at Morgan Stanley; Price Target: $2.35

  • Downgraded to hold from add at Morgans; Price Target: $2.57 from $2.78

  • Retained at accumulate at Ord Minnett; Price Target: $2.51 from $2.56

Scans