Momentum Monday 23 January 2022

22nd Jan '23 by Elio D'Amato

7 comments 454 reads

We will likely commence this tennis induced sleep deprived week with some positive momentum given the close on Friday both here and overseas.

In Australia, markets will be closed for Australia day, so expect a very busy week announcement wise as companies aim to deliver either their quarterly cash / activities statements or provide updates on their business in anticipation of the coming reporting season.

In the US their quarterly earnings period continues in earnest and its results will have a big say on sentiment over here.

Week ended 20 January 2023

S&P500

Despite Fridays positive close, the S&P500 actually closed their shortened trading week down on lingering concerns of a continued rate rising cycle and impending recession.

Reports from analysts are surfacing saying that thus far it has not been a strong period for US earnings, with magnitude of positive earnings surprises reported by S&P 500 companies below their 5-year and 10-year averages. Looking ahead, analysts expect earnings declines for the first half of 2023, but earnings growth for the second half of 2023.

But the good news in earnings reports came on Friday came in the shape of job cuts at Google and rising subscriber numbers at Netflix. This returned the market to positive momentum on Friday and investors will hope it carries on to Monday.

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I say 'hope' because as mentioned last week, the US Market had hit the upper end of the long established downward channel. The action last week where we saw a break out of the channel but then a subsequent close below it and ultimately down for the week adds risk that we have a new lower high (LH).

We all hope that this was simply a case of the market trying to regain its strength for a tilt at the previous lower high of 4100, remembering breaking out of the downward channel doesn't immediately mean we are out of the down trend, however it will provide some comfort that perhaps the pace of the broader sell off has finally run out of some steam.

If the index cannot break out of this channel then there is a downward target of initially 3700- 3740 range, and should it fail to hold that level then 3583 will come into play,…

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Stephen Croft2

23rd Jan '23

Thanks Elio! Would selfishly love some commentary on any of the stocks in my portfolio. AKE, CAR, QAN✅️, SXE, BSE, IPL, CRN, FEX.

Elio D'Amato

Thanks for the suggestions. I have covered CRN and IPL in the past. But we can always do with a refresh. Charts never stop moving. I will cover them over the coming weeks.

Sagie5

24th Jan '23

Hi Elio. Your guidance on NAN couldn't come at a more appropriate time. Thanks. Cheers !!

Certainly is perplexing, I'll be glad once it becomes clearer.

jabconsl

Could you have a look at Mineral Resources (ASX:MIN) ...please. I can see that the Piotroski F-Score shows some issues. However this stock has risen from $44 ((July 22) to a current $96.

I sold about 43% of my shares in them at $72.59 (and wish I hadn't). The old when to sell question. On my Cost they are yielding 13.36% which is an excellent dividend.

25th Jan '23

I always like talking about MIN (held) and so should you given 53% remains! Sounds like a reasonable portfolio decision made at the time in the interests of the portfolio. You point to the Piotroski F score, and it was always going to be a little hard for MIN for three reasons:

1. The aggressive capital expenditure program the company has undertaken in the past 12 months means cash drain is significant

2. The company took on US$1B of debt funding to cover, "general corporate purposes, including for capital expenditures." So their debt balance grew.

3. In their last result the price of Iron Ore was much lower than the previous corresponding period impacting earnings growth.

I suspect much of this will normalise when they report their next set of financials Though in the last production update (21/01) the company pointed to a slight decrease in Iron Ore output.

The price has remained elevated as many suspect the iron ore and lithium business will be split into two separate entities. Oh, as you have pointed out the juicy expected dividend helps.

Hope this helps.

Thanks for responding. I still like MIN [I sold because the Mkt price was almost double what I paid per share-the old saying every buy or sell decision looks wrong the next day :-) ]. Now it's almot 2.5 times what I paid !
I have alerts set to watch for a price drop, (which actually happpened to day based on revised Lithium Output).

Even then, It can can get tricky though, if the lithium business is floated. Watch and wait I guess.

Momentum Monday 23 January 2022

Week ended 20 January 2023

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Elio D'Amato

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