june 2010 your markets monthly
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DESCRIPTIONASX200 Index trade idea, Aegis research - Australian Equity Strategy, Coffee Futures at 12 Year Highs, Foreign Exchange Forecasts, Advice from Top Traders, Pivot Points
June 2010Volume 2, Edition 6
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In this edition:
ASX200 Index trade idea; 'bearish or portfolio hedge' - William Chien
Aegis research - Australian Equity Strategy - Sector Reports - Still value in some areas
Coffee Futures at 12 Year Highs! - Tom Sellen, Dow Jones Newswires
Foreign Exchange Forecasts - Credit-Suisse
Advice from Top Traders - Summaries from Market Wizards
Technical Indicator of the Month: Pivot Points - Jason Achjian
Recommendation Program update - Commodities Basket Recommendations - William Chien's CFDs - Top Trader - Seasonal Spread Trading
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ASX200 Index trade idea; 'bearish or portfolio hedge' - By William Chien
After rejection of the 4622 level on 21/06/2010, the XJO index appears to resume falling after the rebound in the last 3 weeks.
Hence, I would highly recommend hedging long term share portfolios. I have devised an XJO ratio put spread to take advantage of a potential drop in the XJO index or to hedge against an existing Aussie share portfolio.
The advantages of this trade are the following.
Low risk: maximum potential loss = $500 plus brokerage No ongoing margin requirement The positions will be profitable within a large price range below the current market price on expiryHigh potential reward: maximum potential profit = $3,500
Please ring the Dealing Desk on 1300 73 66 11 or email firstname.lastname@example.org if you would like the full trade details.
To receive all of Williams email recommendations in full detail please contact him by phone: 1300 73 66 11 or email:
Aegis research - Australian Equity StrategySector Reports - Still value in some areas
The aftermath of the global financial crisis, arguably extending from late 2007 to mid 2009 using US quarterly GDP movements as an indicator, has created an economic and investment landscape quite different from that which lead up to and helped create the conditions for one of the largest global economic declines since World War II.
Here in Australia, we appear to have weathered the crisis reasonably well with only one quarter in the last nine of negative economic growth, covering the abovementioned period, and that being a modest quarter on quarter decline of 0.8% in the December 2008 quarter when global trade quite literally, but temporarily ground to a halt. While Australia's economic growth has not been startling subsequent to this challenging brief period, quarterly GDP outcomes of 0.6%, 0.8%, 0.3%, 1.1% and 0.5% in the most recent March 2010 quarter have demonstrated a resilience to economic headwinds that many other western nations continue to grapple with, particularly in southern Europe (public sector debt, unemployment) and some segments of the United States and United Kingdom economies (unemployment, housing).
Of course, this in no small part is due to our fortuitous position of being geographically located close to two of the fastest growing large economies in the world, namely China and India, who happen to require large volumes of resources Australia has in reasonable abundance with a capacity to extract and transport them to these resource consuming nations. With the historical background of our present day resources industry largely being developed to supply raw materials and energy to the strongly growing Japanese economy post World War II, our major trade relationship is now with China, having surpassed Japan as Australia's biggest trading partner two years ago. Nevertheless, Japan remains an important customer to our extractive industries. An expanding Indian economy presents both direct and indirect benefit to our domestic fortunes, which cannot be under-estimated via its contribution to increased global demand for raw materials and energy, in addition to specific areas such as educational services.
The strength of our domestic banking system throughout the global economic downturn was, and continues to be, a major contributor to our economic resilience and steady advancement in prosperity. With the Federal Government introducing a bank guarantee on customer deposits in 2008 and banks raising additional capital to enhance reserves, access to foreign capital remained open, albeit on higher margins allowing a relatively "normal" banking system to operate, unlike many western peers where major banking collapses were occurring.
Closer to home, our ageing population, advancement in medical treatments and improving living standards continues to place greater and greater demand upon health services, both private and public. We foresee ongoing opportunities for our high quality Health Care sector in coming years, both domestically and abroad and no surprise that private equity is presently sniffing at the sector.
High domestic employment combined with sound economic growth will combine to provide a positive platform for well managed retailers to enjoy in coming years. While the global financial crisis has impacted consumers spending patterns somewhat, adopting a more conservative stance with respect to debt / savings and discretionary spending, this may act to remove some elements of lesser managed retailing competition. Retailing is a specialised business and this environment provides for those companies that do it well to prosper.
Overall, we believe economic, business and consumer spending patterns will become more measured in coming years, compared to the debt driven, living off the next generation ethos that was prevalent before the downturn. This provides an environment for high quality businesses to perform, while making it challenging for those not so well managed. For investors, an opportunity to either refocus or remain attentive to investing only in high quality stocks that our analysts will in the following sections.
The operating environment and economic outlook for Australia continues to improve and we expect a long term boost to business activity from Australia's position relative to the fast growing emerging economies across Asia. We retain our positive view on the long term growth prospects for the Australian economy, and by default the Australian banking sector. We see strong medium to long term growth prospects for the banks, supported by an increasing level of consumer, investor and business confidence as the shift in business focus to the rapid economic expansion across Asia.
In summary, we maintain positive (overweight) views towards the Banking, Health Care, Resources, Telecommunications and Retail sectors, believing they offer strong medium term returns from current levels but importantly commensurate with a manageable level of risk. We hold a relatively negative view (underweight) towards sectors such as Media and A-REIT's. While media stocks have enjoyed strong share price recovery rallies over the past year, we feel share prices may be ahead of fundamentals at this time and do not offer as attractive value. The A-REIT's sector, having stabilized in recent months with cap rates showing a degree of leveling, has nevertheless an ongoing hard road ahead with massive dilution impacts from necessary capital raisings last year to absorb before generating reasonable unit per share growth and hence meaningful lifts in distributions.
Aegis current recommendations - Retail and Resource sectors
StoneBridge Group has full access to Aegis research and Buy / Sell recommendations.
If you want a report on a particular ASX share from Aegis please email email@example.com with a request
Copyright 2000 - 2009 Aegis Equities Holdings Pty Limited. All rights reserved.This information must be read in conjunction with the Legal Notice which can be located at http://www.aegis.com.au/public/disclaimer.aspx.
Coffee Futures at 12 Year Highs! - Tom Sellen, Dow Jones Newswires
Coffee futures have taken a breather in the last two sessions after vaulting to 12-year highs last week. Traders may be content to hold prices in narrow ranges as they assess the market's new trading parameters. September coffee rallied to a top of $1.7650 last Thursday but closed at $1.6875, as traders took profits off the newly minted 12-year peak and producers sold. Tight supplies of quality arabica beans continue to support the market, but there are signs that the supply situation may be softening. The market rally has been centered more on chart aspects than on fundamentals, as the global supply balance has been snug for some time, said Hussein Allidina, veteran analyst with Morgan Stanley. Tight supplies are now beginning to release their grip on the market with the onset of the large Brazilian coffee harvest, he said in a research note. In addition to supply concerns, coffee futures have shot up dramatically in the last two weeks because of "unfounded" frost concerns in Brazil. The weather scares, combined with a persistent fall in ware