May Take On It All – August

It’s been a while since I have updated everyone on everything from this side of the desk and we seem to be as settled in the new office as we possibly can be given everything the market has thrown at us this year. Given the amount of time that has passed since I last updated everyone, I thought I would provide my view on the current state of play along with outlining some of the things we have been doing and what is currently in play along with some ideas going forward.

With the issues in Greece dominating the early part of the northern hemisphere summer it now seems to have stopped making the headlines of every media outlet available.  This has seen the Euro trade in a range between 1.0500 to 1.1500 against the USD.  European equity markets took the news badly on any negative news but were also very quick to rebound on any sign of an agreement or turnaround in the market. The sell offs provided good buying opportunities and we did so by purchasing some DAX calls through issued trade alerts. All trades that have been recently executed can be seen in the Performance Report that can be downloaded through the Performance Page.

Post Greece, the market then shifted its focus to China and the Federal Reserve in the US. The swings on a daily basis on the Chinese equity markets were significant to say the least but this was to be expected given the massive run up we had seen – 69.84% gain from the lows made in February this year alone!

In the US all eyes are on the September FOMC meeting in anticipation of a possible rise in interest rates. We have seen the USD strengthen against most currencies, combined with commodity prices, QE in Japan and Europe all pointing to more strength in the USD. The big question remains as to how far can this go? If we look at the Australian dollar, we have weaker commodities, slowing demand in China and the RBA still on an easing bias so holidays in the US don’t look like they are going to get any cheaper any time soon. The AUDUSD in on course to touch 70 cents this year in my opinion. On the holiday front the only positive is the lower crude oil prices which is benefiting the airlines but doesn’t quite seem to have made its way to the petrol pump for our benefit. Fuel Prices are higher now that when oil was trading around $100/barrel! – explain to me how this works?!

Looking forward I still have a preference for US equities over domestic equities but having said that, we have done quite well locally but better offshore. Stocks such as CSL have pushed to new highs, The banks have been steady and the miners have been hammered. I have been issuing investment recommendations on the ASX200 and we have simply been buying dips in the index. To date we are doing well with this strategy as you can see in the Performance Report on the Performance Page. Timing has been everything but my core view remains that we should perform better in the second half of the year as compared to the first half. With regard to the US we have also been on the right side of the currency move so not only has it been a case of calling the direction of the equity markets but the currency gains have also improved the returns.

From here, I continue to favour health care, technology, pharmaceuticals, biotechnology, banks and solid trending stocks which continue to deliver. The most notable example being Walt Disney in the US up until the overnight movements. Stock down circa 10%.

I will look to put a note out, post the close of each month with an update. Please use this as an opportunity to ask any questions you might have.

LP

Our Eyes Are On the Following….

Most of my focus at the moment is offshore, predominantly in the US as we are seeing a strengthening USD and a falling AUD, meaning that when we close trades in USD, our profits in AUD are even greater. In the last six months alone, if you were to hold your cash in USD rather than in AUD in your Australian bank account, you would have returned approximately 17% alone as the Aussie Dollar has fallen away.

In terms of US names we are predominantly invested in the following companies:

Apple Inc. (AAPL) – Target price $137.00.

Citigroup (C) – Target price $73.00.

Rackspace (RAX) – Target price $55.00.

Monster Beverage Corp. (MNST) – Target price $136.00.

Another huge focus of my client’s portfolio’s is getting exposure to the WTI Light Crude Oil price through United States Oil Fund (USO) and PowerShares DB Oil fund (DBO) Exchange Traded Funds. I am expecting to see a bounce in the oil price in the next calendar year and looking to take advantage of this through these funds.

On the local front the names I have in mind at the moment are all yield plays essentially:

Most of the banks.

Telstra (TLS)

Wesfarmers (WES)

Woolworths (WOW)

Flight Centre (FLT)

Woodside Petroleum (WPL) – again, to get exposure to the oil price on an expected rebound.

I think overall, the markets are due for a slight correction before looking to move higher throughout the latter half of the year. Feel free to contact me for any research on the above stocks and what I am basing my thoughts on.

LP

Trade Alert – Buy US WTI Crude Oil

Hi all,

I’m a firm believer in this trade alert just issued. You can see the trade alert details further down by clicking the text. I think we will see a strong rebound in the price of oil in the months to come. Please look at the seasonal chart below to see the average price action of Crude Oil over the past 20 years. As you can see, coming into February is when we should start to see a strong move higher as the Northern hemisphere looks to begin their summer. With such massive sell offs in the last 6 months, I think this trade is primed to see some strong returns.

Clients, please contact me about how you can get crude oil exposure in your account through a futures trade, futures options, commodity CFD’s or stock/CFD ETF products with exposure to the oil price.

Non-clients, please ask me about how you can look to open an account with BBY and myself in order to invest in these trade alerts. Visit www.pilkingtontrading.com.au for more on client benefits and the types of accounts available to you through BBY.

Seasonal Chart:

You can view the Trade Alert by clicking here.

Market Update – 11th September 2014

Below is a brief rundown of the currency and equity markets and Pilkington Trading’s views.

Currency markets.

Strong USD to remain

Europe and in particular Germany is showing some real signs of weakness and if ECB goes down the QE path it could be a prolonged period of weakness for the Euro.

Scottish referendum weighing in on the GBP along with the weakness across Europe. Volatility is back to more normal levels above 10%.

AUD and NZD are being hurt by weaker commodity prices and a prolonged outlook for lower interest rates on home soil.

EURCHF – Concern is growing that the peg at 1.2000 will give way which will create a lot more volatility if that is the case.

The FOMC meeting next week could really paint a picture for a stronger USD so possibly more weakness in the AUD.

The ECB is not meeting until Oct 2^nd

 

Equity Markets

All eyes on Alibaba’s public listing next week with talk it will come in at between $60-$66 per share for a value of about $20+ billion.

AAPL is back in the news with its new product launches this week. First day of the announcement saw a volatile stock price ranging from $96.14 to $103.08 before looking to close only $0.37 below the previous close. After digesting the news and the company releasing its new products including the iPhone 6, iPhone 6+ and Apple Watch, investors liked what they saw and the stock saw a good bounce closing up 3.07% at $101.00. A move higher from here looks likely in our opinion.

Dow still remains the weakest of the 3 major indices in the US posting the smallest gains with +3% as opposed to +8% for the S&P500 and +9.8% for the Nasdaq YTD.  We are still firm believers that the technology trend will continue and favour exposures to the stocks listed on the Nasdaq Exchange.

It’s time to build/begin that portfolio! 20.05.2014

Thought I would pen together a quick email to update you on where the markets are sitting, my views on what I believe will be happening and the stocks I have/looking to gain exposure in.

I believe we are starting to see the top of the market and a small pull back is upon us. The XJO has had two strong negative days and I think we should see the index head toward 5300 over the next month or so. I still believe we will see the markets rally from June onwards and this pull back will be a great opportunity to enter the markets with a view through to the years end and beyond. There is plenty of money sitting on the sidelines with massive fund managers and superannuation providers. There is talk that a shift from bonds (only returning 2.56% on 10 year US Treasury notes ) into the equity markets will bring a whole new wave of buying momentum. I have a target locally of the ASX200 reaching 6000 by the years end.

 

High yielding stocks are paying investors dividends upwards of 5-6% (TLS, WPL, NAB etc.) alone on local soil and some stocks in the US yielding upwards of 8% in strong, well performing companies such as Seadrill Ltd. (10.47%) and High yielding ETFs . I think it is a great time to look into getting into some safe, high yielding stocks that have a good management team behind them and are looking to grow. I especially like the look of Woolworths (WOW.asx) on the local market. The stock has broken the $37.00 level convincingly, come back and is looking to use this level as a support before we see a rally higher from these levels. Coinciding with the 50 day moving average, a key rising trend line and the stock bouncing from the 38.2 Fibonacci retracement, I think we will see a move higher from these levels.

 

These stocks will drive our market higher, return investors with great dividends and have a good chance of seeing capital growth in the medium to long term. It’s a great time to be looking to build on your current portfolio or begin to build one with the support of BBY Limited and myself. With access to the best local stock and sector research, 24/7 trading desk support and execution services, access to daily reports, market wraps and trade ideas, do yourself a favour and find out how we can structure a strategy to suit your investment style and risk appetite.

There are both the online (more do it yourself with access to most features) and full service broking options (complete full service broking option that allows you to build a strong portfolio with a hand to hold) available. For a conservative Covered Call writing or High Yielding option strategy that may suit your SMSF or personal trading goals with a long term outlook please ask as this is an area that is extremely important to remain in control of (Now that we are all going to work until we are 70!).

Please contact me if you are interested in knowing about the stocks both locally and internationally that I have invested in myself and have the majority of my clients gaining exposure in.

Clients, please feel free to ask me any questions you may have.

LP