Successfully reported this slideshow.

2014 Australian Corporate Reporting Season Buy and Sells


Published on

The Australian corporate reporting season is discussed in this Invast Insights report. As the key costs in terms of earnings were shared, we gave our opinion whether the companies numbers indicate a buy or sell, at current levels. We also provide a technical outlook regarding the Australian Dollar, Japanese Yen, Sterling and the US Dollar after monetary policy meeting minutes were released. We capped this report with a book review of Harry S. Dent's "The Demographic Cliff".

  • Be the first to comment

  • Be the first to like this

2014 Australian Corporate Reporting Season Buy and Sells

  1. 1. Invast Insights Week Commencing February 17, 2014
  2. 2. | 1800 468 278 This week we look at the following topics: 1.0 Reporting season buy & sells 2.0 Technical outlook & key level updates 3.0 Book review – The Demographic Cliff
  3. 3. | 1800 468 278
  4. 4. | 1800 468 278 1.0 Reporting season buy & sells Australian corporate reporting season ramps up over the next two weeks and below are some key costs, what they are expected to report in terms of earnings and our view on whether they are a buy or sell at current levels. Our views on these stocks are general and we will follow on with a more in-depth analysis following reporting season sometime in May. The chart below is just to give you our expectations and our thoughts on each key stock subject to the numbers printing out.
  5. 5. | 1800 468 278
  6. 6. | 1800 468 278
  7. 7. | 1800 468 278
  8. 8. | 1800 468 278
  9. 9. | 1800 468 278
  10. 10. | 1800 468 278
  11. 11. | 1800 468 278
  12. 12. | 1800 468 278
  13. 13. | 1800 468 278
  14. 14. | 1800 468 278 2.0 Technical outlook & key level updates Plenty of market moving events scheduled next week, we like to focus on some instruments that will be highly impacted by these announcements. Bank of England, Bank of Japan, Federal Open Market Committee and Reserve Bank of Australia will release their monetary policy meeting minutes and as such we want to focus on the Australian Dollar, Japanese Yen, Sterling and the US Dollar.
  15. 15. | 1800 468 278 AUD/USD Following lower than expected employment numbers, with Australia shedding 3.7 thousand jobs last month and unemployment rising up to 6%. Gains were wiped out and potential to stage a trend reversal slips away. The key resistance level at 0.9025 we put out over several videos in the past week remains strong, as noted on the Daily chart there was no close above 0.9025 as of yet. With price currently within the Ichimoku cloud attempting a break above, any weakness in the Australian economy could trigger further selling in the Australian dollar. Downside support is currently located at 0.8950 and a daily close below this level could signal a down-trend continuation. We remain bearish on the medium term outlook of the Australian dollar and expects a potential retest of 0.8825 and 0.8700 in the coming days.
  16. 16. | 1800 468 278 Figure 1 AUD/USD Daily Chart, source: Invast cTrader
  17. 17. | 1800 468 278 Key event to watch for this week is the HSBC Chinese Flash PMI numbers. Previous month result was 49.5 a downward revision from the actual 49.6 release. Market consensus is not out yet but it’s expected to be around 50.0. Any numbers below 49.00 could trigger a selloff in AUD/USD as the currency is reliant on Chinese data GBP/USD Impressive recovery from the UK as key economic data continues to improve. One of the biggest concern in the past month has been the rapid drop in unemployment rate. Bank of England upgraded their GDP forecast to 3.4% from the previous 2.8% and lowers their unemployment outlook. While there is a potential for inflation to go up, Bank of England is “not going to take risks” with the current recovery. GBP/USD continues to push higher beyond the key 1.6600 level and posted a 3 year high at 1.6673. While we expect a little pullback to occur this week
  18. 18. | 1800 468 278 week, ultimately the longer term view remains to the upside. As such our strategy is not to sell the correction but rather wait for the correction to be over before attempting any further buying in GBP/USD. Key support for the pair is currently located at the key 1.6600, 1.6550 and 1.6500. While a correction to these support level is preferable, there are two very high impact news from the UK next week. The first is UK CPI on Tuesday – while the consensus is not out a print higher than 2.1% will trigger a rally in Cable. The second is UK’s unemployment rate, while it is not the only indicator linked to BOE interest rate guidance another drop in unemployment rate will also trigger a rally in Cable. With that in mind there is a slight chance correction could be shallow. Key resistances to the upside are located at 1.6725 where 127.2% fibonacci extension is located, followed by 1.6850 where 161.8% fibonacci is located. Our view on GBP/USD remains to the upside and we will update through our blog once an entry is probable.
  19. 19. | 1800 468 278 Figure 2 GBP/USD Daily Chart, Source: Invast cTrader
  20. 20. | 1800 468 278 USD/JPY Disappointing data from the US continues to weigh on the greenback. While FOMC will likely continue to taper, it will do so in steps and will accommodate significant economic changes. FOMC will release their meeting minutes on Thursday, a focus for most traders as they look for answer to why FOMC continues to taper QE in light of disappointing Job numbers. On the technical front USD/JPY only managed a recovery to 38.2% fibonacci before sharply rejected. The key resistance at 38.2% is located at 102.50 and the immediate support for the pair can be found at 101.50 where the trendline support is located followed by 100.75 key support. While we previously call for an end to the drop in USD/JPY at 100.75, recent data from the US force us to reconsider. As the pair is no back trading below the Ichimoku Cloud, any close below 101.50 key level will likely trigger further
  21. 21. | 1800 468 278 selling towards 100.75 and potentially 100.00. This is also the 61.8% Fibonacci retracement from the major rally last year.
  22. 22. | 1800 468 278 Figure 3 USD/JPY Daily Chart, Source: Invast cTrader
  23. 23. | 1800 468 278 3.0 Book review – The Demographic Cliff This book was actually recommended by one of our own staff members who read it over the holiday period. The conversation around the office was pondering on where the Australian economy is set to go over the next few years and the staff member suggested reading The Demographic Cliff which thinks Australia is one of the best positioned countries to withstand the challenges that are set to come. Author Harry Dent shows why we’re facing a “great deflation” after five years of desperate stimulus—and what to do about it. We don’t necessarily agree with all the conclusions that Dent makes in this book but his analysis and ideas are nevertheless interesting and worth pondering on.
  24. 24. | 1800 468 278 Demographics is a very interesting area of study and not something we have written about in Invast Insights to date, but we plan to make this a more regular theme in the future. Throughout his long career as an economic forecaster, Dent has relied on his not-so-secret weapon: demographics. Dent studies the predictable things people do as they age is the ultimate tool for understanding trends. For instance, Dent can tell a client exactly when people will spend the most on potato chips. He also explains why our economy has risen and fallen with the peak spending of generations and why we now face a growing demographic cliff with the accelerating retirement of the Baby Boomers around the world. Dent predicted the impact of the Boomers hitting their highest growth in spending in the 1990s, when most economists saw the United States declining. His future predictions might not work out as well. For example Dent suggests the Dow Jones might fall to around 5,800 by 2015 which to us sounds absurd. He also suggests families should wait to buy real estate in areas where home prices (more so those in the United States) have gone back to where the
  25. 25. | 1800 468 278 bubble started in early 2000. We think these forecasts will be wrong, but the most interesting part of the book is the actually focus on demographics rather than market predictions and on that level we think Dent has some very interesting things to say. For around US$12 on we think it’s worth adding to your buy list. Visit our site to learn more about using Ctrader in currency trades.
  26. 26. | 1800 468 278 7.0 Disclaimer Please note that you are receiving this report complimentary from Invast Financial Services Pty Ltd (AFSL 438 283). Invast staff members may from time to time purchase securities which are included in this or future reports. The authors of this report may or may not be holding a position in the securities mentioned. Please note that the information contained in this report and Invast's website is of a general nature only, and does not take into account your personal circumstances, financial situation or needs. You are strongly recommended to seek professional advice before opening an account with us. General Disclaimer: This newsletter contains confidential information and is intended only for the person who downloaded it. You should not disseminate, distribute or copy this newsletter. Invast does not accept liability for any errors or omissions in the contents of this newsletter which arise as a result of downloading this newsletter. This newsletter is provided for informational purposes and should not be construed as a solicitation or offer to buy or sell any financial product. Invast Financial Services Pty Ltd is regulated by ASIC (AFSL 438 283 | ABN 48 162 400 035).
  27. 27. | 1800 468 278 Risk Warning: It's important for you to read and consider the relevant Product Disclosure Statement, and any other relevant Invast Financial Services Pty Ltd documents before you decide whether or not to acquire any financial products listed in this email. Our Financial Services Guide contains details of our fees and charges. All these documents are available here on our website, or you can call us on +612 8036 7555. CFDs and Foreign Exchange are leveraged products and carry a high level of risk and you can lose more than your initial deposit so you should ensure CFD and Foreign Exchange trading meets your personal circumstances. General Advice Warning: Being general advice, this newsletter does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. *Distributed with the permission of