Evening Wrap: ASX 200 tumbles over 100 points as US tech rout smashes Xero, Wisetech, Life360 & Co., mining and energy stocks keep sliding

Aussie stocks came back to earth with a thud today. You could almost say through no fault of our own. Blame those darned Americans I say!

Their tech got belted last night – and so too did ours today. But the belting didn't stop there, all 11 of our major sectors were down today...from defensive Consumer Staples to the highest PE stocks across Technology and Consumer Discretionary.

Energy and Resources weren't the worst today, for a change, but they weren't any good either. Gold, oil, and uranium stocks were summarily turfed from portfolios.

I could go on...and on...because as you will see when you get to the winners list, it was lean...real lean.

Ordinarily, I'd propose you skip reading tonight's Evening Wrap in favour of waiting for the next up day – but that would deprive you of all the great analysis and insights that lie within (particularly in today's ChartWatch!).

So...you might as well join me and...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 102.5 points lower at 7,861.2, smack bang on its session low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by an appalling 45 to 223.

All 11 of the major ASX sectors (plus all of the sub-sectors like Gold and Resources) were down today. The least-worst sector was the defensive Consumer Staples (XSJ) (-0.61%), but the losses mounted quickly from there.

It was no surprise (given the NASDAQ’s folly Wednesday) that the Information Technology (XIJ) (-2.7%) sector bore the brunt of the selling. There was little place to hide across tech stocks with key sector heavyweights like Xero (ASX: XRO) (-3.5%), Audinate Group (ASX: AD8) (-3.3%), Wisetech Global (ASX: WTC) (-3.2%), and Life360 (ASX: 360) (-3.1%) taking it on the chin.

Also doing it tough, were Gold (XGD) (-2.0%) stocks, suffering from a double-whammy of a demand-side vacuum today and a dip in the gold price. It was perhaps even more debilitating given the gold price was looking good for a move back to the highs yesterday. After the 24 July candle, and today’s (still live) follow through, it appears that possibility is on hold for a while.

COMEX Gold futures chart. Source: TradingView

Interest rate sensitive stocks like Consumer Discretionary (XDJ) (-2.0%) and Real Estate (XRE) (-1.7%) were also hit hard. Rates markets were topsy-turvy last night with longer term rates rising against a fall in shorter term rates. It all equals volatility and great uncertainty – and that means investors usually rush to the sidelines.

Resources (XJR) (-1.6%) and Energy (XEJ) (-1.8%) weren’t the worst today, for a change, but they weren’t any good either. I expect you don’t want me to show you tables with all the stuff in your portfolio that copped a hiding today…so I won’t. 😭

ChartWatch

NASDAQ Composite Index

The end of the beginning...

The last time we covered the Comp was in ChartWatch in the Evening Wrap on 18 July.

In that update, I noted it was crunch-time for the Comp’s technicals.

I said stuff like: “last night's gap and fall is possibly the clearest supply side showing since this last phase of the Comp's bull market began in October last year. It is significant. It should not be ignored” and “we really must see long white-bodied candles and or long downward pointing shadows tonight or tomorrow night. To wait any longer than this, or to not see strong demand-side candles in the next couple of session – courts deeper falls”

What I didn’t foresee, was what the impact a continued supply-side push would have on say, the Russell 2000 – which as you know, I have pegged as the better US benchmark index for us to use here.

I believed that a continued rotation out of mega-cap tech likely wouldn’t dent the broader US market too much. It did last night, but I still believe my original hunch is correct. The broader US bull market – and therefore our own – can withstand some NASDAQ pain.

Like with many things, it’s just a matter of how much pain it can withstand.

Which brings me to the current Comp chart. Wednesday’s gap-down and long black candle is about as strong an indication of supply-side control you can get. It also closed below three potential points of demand (remember what I said yesterday about what makes a point of demand or a point of supply valid?).

We are operating in an environment of a demand vacuum at the moment.

Don’t get me wrong, demand is still out there, it's just taking a breather.

It’s worth defining demand at this point. Demand is all the cash in the world that’s available to invest. It’s a lot. It didn’t just disappear because a few big tech stocks are falling.

Our job is just to wait around, check our candles each morning, and determine when that demand is beginning to move back in.

When it does, given its historical propensity to buy Comp dips – I suggest it will return in force and supply will again crumble in its path.

The fingerprints of demand are candles with white-bodies and or with downward pointing shadows. But, given the prevailing degree of supply-side control, I suggest we can’t just jump at any old demand-side fingerprints.

A good rule of thumb (another digit!), is to require equal an opposite demand-side candles to the supply-side ones that created the correction. So, this suggests some pretty heavy hitters. Until we see those, I suggest not getting in the way of this move.

Watch for those heavy hitters around the 17032 point of demand, or failing that, the 16445-16539 zone of demand. Also note, the latter coincides with the dynamic demand of the long term uptrend ribbon – I suggest it will be crucial in defining how this correction plays out.

17657 is now the closest point of supply, and then 18129. Also note the short term trend ribbon will likely deliver dynamic supply until the Comp can reclaim it.

As for if this is the "beginning of the end" for stocks… You know I don’t deal in prognostications! But, based on my experience of these situations, I’m going with "just the end of the beginning for now".

S&P/ASX 200 (XJO)

So where does that leave us?

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 23 July.

It was a happier time. A time of “it’s just a gentle pullback from the new all time high…perfectly natural…there’s nothing to see here!”.

Today, unfortunately, that last candle indicates that there is something to see here – a return to short term supply side control.

We didn’t see any indication today that the 7839-7911 demand zone is doing its job – therefore I can only conclude this area isn’t a demand zone. Like in the US, demand is taking a break until it gets some clarity on just how bad the current situation is vis-à-vis “the long overdue correction” the bears are always banging on about.

There’s plenty of historical congestion to be encountered from here, with 7759 now standing out as the most likely next key point of demand. Below that, 7698-7702, and then down to the dynamic demand of the long term uptrend ribbon.

As with the Comp, we’re waiting for the demand side to return in the form of their customary white-bodies and downward pointing shadows. I can say this all I like, but I think we both know the Aussie market is going to create its own demand-side candles for and by itself – it will wait until the day after US indices have printed some to do so!

Economy

Today

• There weren't any major data releases in our time zone today

Later this week

Thursday

• 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

• +5.2% Coronado Global Resources (CRN) - Q2 FY2024 Quarterly Activities Report

• +4.7% Immutep (IMM) - No news, customary volatility!

• +4.0% Jupiter Mines (JMS) - No news, tin price rallied 3.4% on London Metals Exchange yesterday

• +3.3% Austin Engineering (ANG) - No news, rise is consistent with prevailing short and long term uptrends (phew!) 🔎📈

• +3.0% Pacific Current Group (PAC) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +2.5% BrainChip Holdings (BRN) - Appendix 4C and Quarterly Activities Report and Investor Presentation and Share Purchase Plan Offer

• +2.0% Telix Pharmaceuticals (TLX) - No news, but I note yesterday's FDA Accepts Telix NDA for New Prostate Cancer Imaging Agent, rise is consistent with prevailing short and long term uptrends (phew!) 🔎📈

Trading lower

• -13.2% Arafura Rare Earths (ARU) - Arafura launches A$20m placement and A$7m SPP

• -11.7% Syrah Resources (SYR) - June 2024 Quarterly Activities and Cashflow Report and June 2024 Quarterly Activities Presentation, fall is consistent with prevailing short and long term downtrends 🔎📈

• -9.7% Regis Resources (RRL) - Quarterly Activities Report, fall is consistent with prevailing short and long term downtrends 🔎📈

• -9.1% Centaurus Metals (C79) - Quarterly Activities - Appendix 4C Cashflow Report and Chrysos Quarterly Presentation Q4 FY24, fall is consistent with prevailing short and long term downtrends 🔎📈

• -8.4% Mesoblast (MSB) - No news, high PE belted today

• -7.7% WA1 Resources (WA1) - No news, no PE belted today

• -6.7% Block (SQ2) - No news, high PE belted today

• -6.4% West African Resources (WAF) - No news, gold belted today

• -5.7% Emerald Resources (EMR) - Ditto gold

• -5.5% Fortescue Metals Group (FMG) - June 2024 Quarterly Production Report, fall is consistent with prevailing short and long term downtrends 🔎📈

• -5.4% Resolute Mining (RSG) - Ditto gold

• -5.2% Liontown Resources (LTR) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -4.9% Bannerman Energy (BMN) - Uranium belted today on falling uranium price, see yesterday's ChartWatch - now in LT downtrend, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.9% GQG Partners (GQG) - No news, likely due to US exposure

• -4.8% Red 5 (RED) - Ditto gold

• -4.8% Alkane Resources (ALK) - Ditto gold

• -4.8% Peninsula Energy (PEN) - Ditto uranium

• -4.5% Deep Yellow (DYL) - Ditto uranium

Broker Notes

29METALS (29M)

• Downgraded to sell from hold at Canaccord Genuity; Price Target: $0.34 from $0.44

• Retained at neutral at Citi; Price Target: $0.45 from $0.55

• Retained at underweight at Jarden; Price Target: $0.33 from $0.28

• Retained at hold at Jefferies; Price Target: $0.40 from $0.50

• Retained at neutral at Macquarie; Price Target: $0.43 from $0.47

• Retained at sector perform at RBC Capital Markets; Price Target: $0.55 from $0.60

The A2 Milk Company (A2M)

• Retained at hold at Bell Potter; Price Target: $7.05 from $5.70

Auckland International Airport (AIC)

• Retained at buy at Shaw and Partners; Price Target: $1.10

Alcidion Group (ALC)

• Upgraded to buy from hold at Bell Potter; Price Target: $0.08 from $0.05

Aristocrat Leisure (ALL)

• Retained at outperform at Macquarie; Price Target: $55.00

Aurelia Metals (AMI)

• Retained at outperform at Macquarie; Price Target: $0.28

Australian Vanadium (AVL)

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

Bapcor (BAP)

• Retained at neutral at Citi; Price Target: $4.70

Boss Energy (BOE)

• Retained at outperform at Macquarie; Price Target: $5.00

Coles Group (COL)

• Retained at outperform at Macquarie; Price Target: $19.40 from $17.50

Domain Australia (DHG)

• Retained at neutral at Macquarie; Price Target: $3.30 from $3.53

Domino's Pizza Enterprises (DMP)

• Retained at neutral at Macquarie; Price Target: $37.00

Endeavour Group (EDV)

• Downgraded to neutral from outperform at Macquarie; Price Target: $5.75 from $5.60

Flight Centre Travel Group (FLT)

• Retained at buy at Citi; Price Target: $24.15

• Retained at sell at Goldman Sachs; Price Target: $18.30

• Retained at buy at Jarden; Price Target: $24.00 from $23.50

• Retained at hold at Jefferies; Price Target: $19.50 from $19.00

• Retained at neutral at JP Morgan; Price Target: $22.50 from $21.50

• Retained at add at Morgans; Price Target: $26.48 from $27.27

• Retained at sector perform at RBC Capital Markets; Price Target: $22.00 from $21.00

• Retained at buy at UBS; Price Target: $27.80

Harvey Norman (HVN)

• Retained at outperform at Macquarie; Price Target: $5.40 from $5.30

Inghams Group (ING)

• Retained at outperform at Macquarie; Price Target: $4.20

JB HI-FI (JBH)

• Retained at outperform at Macquarie; Price Target: $71.90 from $63.00

Light & Wonder (LNW)

• Retained at outperform at Macquarie; Price Target: $178.00

Medibank Private (MPL)

• Retained at buy at UBS; Price Target: $4.20

Metcash (MTS)

• Retained at outperform at Macquarie; Price Target: $4.20

NIB (NHF)

• Retained at buy at UBS; Price Target: $8.50 from $8.90

Opthea (OPT)

• Initiated at buy at Bell Potter; Price Target: $0.70

Paladin Energy (PDN)

• Retained at outperform at Macquarie; Price Target: $15.00

Pilbara Minerals (PLS)

• Upgraded to neutral from sell at Citi; Price Target: $2.90 from $3.20

• Retained at hold at CLSA; Price Target: $3.10 from $3.30

• Retained at sell at Goldman Sachs; Price Target: $2.40 from $2.60

• Retained at buy at Jefferies; Price Target: $3.40 from $3.60

• Retained at neutral at Macquarie; Price Target: $3.25

• Retained at add at Morgans; Price Target: $3.40 from $3.50

• Retained at sell at UBS; Price Target: $2.50 from $2.60

Pantoro (PNR)

• Upgraded to buy from hold at Bell Potter; Price Target: $0.10

Perpetual (PPT)

• Retained at neutral at Citi; Price Target: $22.25 from $23.25

• Upgraded to buy from neutral at UBS; Price Target: $25.00

Qantas Airways (QAN)

• Retained at neutral at Citi; Price Target: $5.85

QBE Insurance Group (QBE)

• Retained at buy at Goldman Sachs; Price Target: $21.00

Resmed Inc (RMD)

• Retained at outperform at Macquarie; Price Target: $35.40 from $34.85

SRG Global (SRG)

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

Treasury Wine Estates (TWE)

• Retained at neutral at Citi; Price Target: $12.95

• Retained at outperform at Macquarie; Price Target: $14.00 from $13.60

Wesfarmers (WES)

• Downgraded to negative from neutral at E&P; Price Target: $59.21 from $57.27

• Retained at neutral at Macquarie; Price Target: $72.10 from $65.40

Woolworths Group (WOW)

• Downgraded to neutral from outperform at Macquarie; Price Target: $37.50 from $35.00

Scans