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The Australian sharemarket closed the smallest margin below the gain line possible to end an eight-day winning streak. Despite the flat finish to the broader indices plenty of stocks were beyond 1.5% either side of the gain line as investors concentrated on individual stocks rather than sectors as a whole.  

The Australian dollar reach seven-week highs ahead of a jobs report tomorrow that is expected to reveal the sixth consecutive month of rising employment.

In economic news, the Westpac-Melbourne Institute consumer sentiment index rose 0.3 index points to 117.3 points in March despite last weeks RBA interest rate hike.

Meanwhile, according to the Australian Bureau of Statistics the number home loans dropped 7.9% in January on the back of increasing borrowing costs and the diminishing First Home Buyers Grant. It was the heaviest fall in almost 10 years and below an expected rise of 2%.

At the end of the day, the All Ords had added 0.5 to 4,829.8, while the ASX/200 shed 0.1 to 4,820.0. Over 2.6 billion shares worth around $5.3 billion had changed hands.

Miners BHP Billiton and Rio Tinto shed 0.4% and 1.1% to $43.24 and $75.35 respectively as the Materials and Resources sector weakened 0.2% after a mixed night for metals prices.

Atlas Iron put on 4.5% to $2.31 after the announcement it would merge with junior explorer Aurox.

Aurox shares spiked 172% to 73.5c.

Entrenched in the red, Nufarm slumped 82c, or 8.9% to $8.38.

Lihir rallied 3.1% to $2.98 despite the price of gold closing lower overnight. The Papua New Guinean focused miner’s CEO said PNG and the Ivory Coast offer lower levels of sovereign risk to mining companies than Australia.

Orica advanced 30c to $25.31 as it announced the Federal Court’s decision to uphold an amended assessment by the Australian Taxation Office is estimated to have a negative impact on the company of approximately $192 million. The company also said a further cash payment of approximately $126 million may be required with an after tax effect of approximately $92 million.

Property Trusts underperformed, with the sector down 2.2%. Westfield and Stockland lost 1.9% and 2.6% to $12.07 and $4.07.

Mirvac and GPT fell 3.5% and 3.4%. 

The banks displayed strength early on, however stumbled following the release of the home loan data. Westpac and CBA put on 1.3% and 0.9%, while ANZ gained 12c to $23.94 as it received regulatory approvals in the acquisition of the Royal Bank of Scotland’s Singapore and Taiwan businesses.

NAB shed 7c to $26.80. The Banks and Financials sector rose 0.1%

Insurer QBE gained 31c, or 1.5% to $21.41.

The Energy sector slid 0.2% as the price of crude weakened, however remained above US$81 a barrel.

Woodside contributed little, adding 27c to $45.49. 

Origin and Santos were the major drags having dropped 1.7% and 1.3% to $16.66 and $13.90.

Oilfield-engineering company WorleyParsons rose 51c, or 2% to $25.68.

Leighton Asciano and Toll were between 0.8% and 1% in the red as the Industrials sector lost 0.4% overall. 

Alesco slumped 31.6% to $3.12 after the company said its full-year profit would be weaker than expected. UBS and Citigroup downgraded their ratings on the stock in broker reports this morning.

Macquarie Airports shed 6c to $3.26.

Qantas and Virgin Blue countered with gains of 2.5% and 2.7% respectively.

Consumer Staples shed 0.6%. Wesfarmers lost 48c, or 1.5% to $32.23 and Coca-Cola Amatil dropped 29c to $11.17.

Foster’s added 7c, or 1.3% to $5.45.

Telstra rallied 8c to $2.99 after the federal opposition said yesterday that it would resist the Government's proposal to split the company. The Telecommunications sector added 2.6%.

Computershare’s 3.5% rally to $12.44 led the Information Technology sector 2.9% higher.

Around the region, the Nikkei 225 dipped 8.2 to 10,559.4, while the NZSE50 rose 13.0 to 3,226.2. The Straits Times Index gained 21.9 to 2,861.5. The Hang Seng advanced 8.0 to 21,215.5.

Spot gold was trading at US$1,124.40 per ounce, while the Aussie was buying US$0.9155.

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ANZ closer to Asian RBS acquisitions
Australia and New Zealand Banking Group said it has received regulatory approvals in the acquisition of the Royal Bank of Scotland’s Singapore and Taiwan businesses.

At the close, ANZ shares were up 12c to $23.94.

Simpson retires as Aristocrat chairman
Aristocrat Leisure announced the impending retirement of three long standing directors in an update on its board succession planning and renewal programme. The company said David Simpson, Penny Morris and Bill Baker have indicated they would step down from their respective positions.

At the end of the day, Aristocrat shares were up 4c to $4.46.

Adamus to tap the market for $30.5m
Adamus Resources has said it would tap the market for an extra $30.5 million, via a placement and rights issue. The junior miner said the funds would be put towards providing additional capital and accelerating exploration activities at the company’s Southern Ashanti Project in Ghana.

At the bell, Adamus shares were trading unchanged at 40c each.

Aurox and Atlas Iron set to merge
Aurox Resources and Atlas Iron have agreed to merge via scheme implementation agreement (“SIA”) that would see Aurox shareholders receive one Atlas share for every three Aurox shares held. Aurox said the merger implies a price per Aurox share of $0.74 based on Atlas’ last closing price of $2.21, representing a premium of 173% on Aurox's last share price of 27c.

At the finish, Aurox shared had surged 46.5c to 73.5c and Atlas shares were up 10c to $2.31 respectively.

Seek lifts stake in JobStreet
SEEK said it has increased its stake Malaysian based provider of employment websites JobStreet Corporation Berhad from 10.1% to 21.3% after paying a consideration of $23.5 million. The company said JobStreet has strong market positions in Malaysia, Singapore and the Philippines, as well as a significant shareholding in the leading Taiwanese online employment provider 104 Corporation.

At the bell, Seek shares were up 6c at $7.61.

Southern Cross refinances $375m facility
Southern Cross Media Group announced that Southern Cross Media Australia Pty Limited (“SCM”) has entered into an agreement with a consortium of six banks for a refinancing facility of $375 million in place of its existing business level debt facility. The company said the facility is for a four year term and that once completed would position SCM with a conservative and sustainable level of debt with long dated maturity.

At the close, Southern Cross shares were up 8c to $2.13.

Australia and New Zealand Banking Group Limited (ANZ) said it has received regulatory approvals in the acquisition of the Royal Bank of Scotland’s Singapore and Taiwan businesses.

ANZ CEO Asia Pacific, Europe and America, Alex Thursby, said the acquisitions were progressing to plan, with Vietnam and the Philippines completed and Hong Kong, Taiwan, Singapore and Indonesia expected to be completed in the next three months.

The bank said it received approval from the Monetary Authority of Singapore allowing ANZ to operate as a full bank in Singapore with up to 25 service locations and approval from Taiwan’s Financial Supervisory Commission for the RBS Taiwan acquisition to proceed.

“Singapore plays an important role in ANZ’s strategy as a banking and wealth management centre for our affluent retail and private bank clients, a focal point for our institutional clients, and a hub for our product businesses and support functions,” Mr Thursby said.

“Taiwan is a key market in our Greater China strategy and the acquisition gives ANZ a substantial Taiwan business with more than one million customers and a sizable commercial and institutional client base.”

ANZ said the Singapore and Taiwan acquisitions would give it more than 2,000 additional staff and 1.65 million additional customers.

As at 1500 AEDT, ANZ shares were up 12c to $23.94.

Westgold Resources Limited (WGR) posted a consolidated profit for the half year ended 31 December 2009 of $735,248, compared to a loss of about $3.23 million a year earlier. However, the gold and base metals explorer said the profit for the half-year included a reversal of a $2.12 million provision for diminution in investment in relation to the company’s investment in Aragon Resources Limited (AAG) incurred in a prior period. Westgold said excluding the above reversal it incurred a loss of approximately $1.39 million, which was lower than the loss incurred in the prior comparative period due to an impairment of $1.79 million incurred in the prior period.

Who cares what the market thinks!  My take is that CSL shares are back in demand!


 

In our last Off the Chart report we looked at Seven and the demand criteria required to buy the stock for a trade and as SEV now launches itself higher we turn our attention to CSL and use the same “market edge” (everyone needs one!) technique to open up a high probability trade on CSL. This will be the first “glance” at CSL for nearly two years as uptrend qualities have been muted – until now!

To trade the odds that a market edge offers we must take all generated signals as by definition of “the odds” it tells us that not all signals will evolve into a profit and of course we don’t know exactly which ones will and which ones won’t. Yes I know, tough but true, and for those stocks that don’t rise as expected we cut them short and for those that do rise we run them as hard as we can thereby making a profit.

A consistent profit can be generated by buying with a market edge and then selling within a controlled environment of money management rules. And the reason we have money management rules is to bring about the best outcome – making money – so the selling rules need to be robust, smart, and able to turn a profit. The selling is about you taking control of the trade yourself. Something many of us fail to do or fail to think we can. No we should not be the mercy of the market and if you are you’ll lose. Respond to the market yes but our responses should be carefully crafted and acted on thereby taking that control of your trading actions and in turn your destiny.

This may seem simple and yes it sounds simple enough but at any point in time we still don’t know what is going to be a profit and its size and what is going to be a loss until that profit or loss is crystallised. There is always a mental tussle in our minds thus my definition of the stock market being likened to a horse race that has no end – until you sell. Thus there is always a battle in our mind, up or down, of in the case of a horse race, first past the post. The sentence above is the old age question which is unanswerable now but always eagerly answered in hindsight. So can we take that unanswerable question out of the equation and turn a consistent profit? Unequivocally yes!

I play a market edge that tells us the stock market trades higher for the majority of the time so I base all my buy signals on simple soundly based demand weighted price actions that repeat themselves just like trends do, over and over again! How often have you looked at a chart of a stock you have bought and for the life of you, you can’t work out why the hell you got out of it when you did because in fact it was still trending  beautifully, as we now know. Trends in stock prices are so prevalent that we should all do better if only we knew how to control ourselves. We need to learn to follow rules and the answer to doing that successfully is to take “us” out of the equation and let the things we know like trends, stop losses, and money management rules takeover thereby gaining the control essential to successful and consistent trading.

Base your trades firstly on entering using a market edge, whatever that may be, to give yourself every chance of turning a profit and those entries should be simple and rule based and then let your money management rules take over to ensure you cut any developing losses and maximise the opportunities any developing rallies offer. Once you’re in a trade the brutal fact is that it is now about making money and not any stock picking wits or glory.

On the money management and selling side we can have risk assessment, volatility, position size and many other conditions as a part of it. My approach is to use a simple stop loss strategy worked in with buy signals which is then limited by a certain amount of risk to each trade. Some large trends are made up of lots of smaller trend moves so if a stop loss is hit, which protects me against calamity and losses, any subsequent New High, if it occurs (if not I stay neutral), is bought to ensure exposure to any new trends and inevitably using this approach I must then capture the big ones. Recent examples include TPM and CBA. Again not able to lay claim to picking the ones that will take off I simply take all signals. In order to do that you must control the amount of stocks you cover so as your money doesn’t run out when a roaring bull roars loudly and buy signals are in abundance.

Let’s now run the simple “buy” template over CSL which has now swept through the criteria ticking each and every box (rule) to enable me to make a sound “odds on” buy recommendation based on changing demand and supply indications of the CSL share price and this has zip to do with fundamentals or what anyone else thinks.

Key Low Reversal Description: Clear evidence of support at a Trading Range or Key Low that must followed and enhanced by evidence of a increased demand taking on the form of a reversal price structure. (e.g. Candlestick Engulfing pattern)Detailed steps using weekly only data:

1. Key Low price level is hit and it holds.
          - Support for CSL is strong at $29.00/30.00

2. Volume rises in response to new buying.
          - Steady increase in volume since lifting off $29.00/30.00

3. Follow through buying
           - CSL share rallies from the support to $35.00

4. Reversal price action breaks identified trigger point on a weekly basis i.e. Fridays closing price.
            - Predefined “buy” trigger was set at $35.00

5. Stockradar then adds a further filter using Stockradar Trend Intensity rating to give confirmation.
            Trend Intensity rating rises to a qualifying 8 out of 10.

6. Buy the open the following Monday and set stop loss
            Stop loss set at a maximum 10% risking 2% of capital = $32.50

What do I do in bear markets?  Contract to cash and preserve my capital.

To uncover more about the Stockradar strategy and now it works go to Stockradar.com.au

“As a weekly long only equity trader my foremost rule is to protect and preserve while profiting from the uptrend cycle of the stock market and this WILL happen if I follow the rules and that’s why I don’t fear losses.”
– Richard Lie

Aussie shares were lower by lunch after retreating in late morning trade. Banks led an early charge before being overriden by weakness among the heavyweight miners and property trusts.

The Australian dollar reach seven-week highs ahead of a jobs report tomorrow that is expected to reveal the sixth consecutive month of rising employment.

In economic news, the Westpac-Melbourne Institute consumer sentiment index rose 0.3 index points to 117.3 points in March despite last weeks RBA interest rate hike.

Meanwhile, according to the the Australian Bureau of Statistics the number home loans dropped 7.9% in January on the back of increasing borrowing costs and the diminishing First Home Buyers grant. It was the heaviest fall in almost 10 years and below an expected rise of 2%.

At noon, the All Ords had lost 13.5 to 4,815.8, while the ASX/200 shed 15.0 to 4,805.1. Over 1.1 billion shares worth around $2.2 billion had changed hands.

Miners BHP Billiton and Rio Tinto took a combined 7.2 points off the index. Their shares were down 1% and 1.1% to $42.96 and $75.32 respectively.

The Materials and Resources sector was down 0.7% after a mixed night for metals prices.

Atlas Iron shed 1.8% to $2.17 after the announcement it would merge with junior explorer Aurox.

Aurox shares had spiked 144.4% to 66c.

Lihir rallied 2.4% to $2.96 despite the price of gold closing lower overnight. The Papua New Guinean focused miner’s CEO said PNG and the Ivory Coast offer lower levels of sovereign risk to mining companies than Australia.

Building materials company James Hardie advanced 14c, or 1.9% to $7.68.

Other mid-caps to make ground included Orica, Amcor, Onesteel and Sims Which were up between 0.8% and 1.2%.

Property Trusts underperformed, with the sector down 1.8%.

Westfield and Stockland lost 1.8% and 1.7% to $12.08 and $4.11.

GPT and Mirvac fell 2.5% and 2.6%.

The banks displayed strength early on, however stumbled following the release of the home loan figures.

NAB was the worst performer, down 13c, or 0.5% to $26.74, while CBA was 1% higher at $55.74.

Westpac and ANZ were relatively flat as the Banks and Financials weakened 0.3%.

Insurer QBE gained 26c, or 1.2% to $21.36.

The Energy sector slid 0.3% in a mixed morning. The price of crude weakened, however remained above US$81 a barrel.

Woodside contributed little, adding 9c to $45.31. 

Origin and Santos were the major drags having dropped 1.6% and 1% to $16.67 and $13.94.

Uranium miner Paladin slumped 11c, or 2.9% to $3.67, while oilfield-engineering company WorleyParsons rose 2.2% to $25.72.

Leighton and Brambles dipped slightly as the Industrials sector lost 0.3% overall. 

Alesco slumped 29.8% to $3.20 after the company said its full-year profit would be weaker than expected. UBS and Citigroup downgraded their ratings on the stock in broker reports this morning.

Asciano and Qantas countered with gains of 1.1% and 1.4% respectively.

Consumer Staples shed 0.5%. Wesfarmers lost 45c, or 1.4% to $32.26 and Coca-Cola Amatil dropped 21c to $11.25.

Foster’s added 6c, or 1.1% to $5.44.

Telstra gained 6c to $2.97 after the federal opposition said yesterday that it would resist the Government's proposal to split the company. The Telecommunications sector added 2.1%.

Computershare’s 2.4% rally to $12.31 led the Information Technology sector 1.5% higher.

Around the region, the Nikkei 225 added 8.6 to 10,576.2, while the NZSE50 edged 0.5 higher to 3,213.7. The Straits Times Index gained 7.9 to 2,847.5.

Spot gold was trading at US$1,120.79 per ounce, while the Aussie was buying US$0.9135.

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Simpson retires as Aristocrat chairman
Aristocrat Leisure announced the impending retirement of three long standing directors in an update on its board succession planning and renewal programme. The company said David Simpson, Penny Morris and Bill Baker have indicated they would step down from their respective positions.

At midday, Aristocrat shares were up 4c to $4.46.

Adamus to tap the market for $30.5m
Adamus Resources has said it would tap the market for an extra $30.5 million, via a placement and rights issue. The junior miner said the funds would be put towards providing additional capital and accelerating exploration activities at the company’s Southern Ashanti Project in Ghana.

At noon, Adamus shares were trading down 2c to 38c each.

Aurox and Atlas Iron set to merge
Aurox Resources and Atlas Iron have agreed to merge via scheme implementation agreement (“SIA”) that would see Aurox shareholders receive one Atlas share for every three Aurox shares held. Aurox said the merger implies a price per Aurox share of $0.74 based on Atlas’ last closing price of $2.21, representing a premium of 173% on Aurox's last share price of 27c.

Half way through the day, Aurox shared had surged 39c to 66c and Atlas shares were down 4c to $2.17 respectively.

Seek lifts stake in JobStreet
SEEK said it has increased its stake Malaysian based provider of employment websites JobStreet Corporation Berhad from 10.1% to 21.3% after paying a consideration of $23.5 million. The company said JobStreet has strong market positions in Malaysia, Singapore and the Philippines, as well as a significant shareholding in the leading Taiwanese online employment provider 104 Corporation.

By lunchtime, Seek shares were unchanged at $7.55.

Southern Cross refinances $375m facility
Southern Cross Media Group announced that Southern Cross Media Australia Pty Limited (“SCM”) has entered into an agreement with a consortium of six banks for a refinancing facility of $375 million in place of its existing business level debt facility. The company said the facility is for a four year term and that once completed would position SCM with a conservative and sustainable level of debt with long dated maturity.

At midday, Southern Cross shares were up 5c to $2.10.

Aristocrat Leisure Limited (ALL) announced the impending retirement of three long standing directors in an update on its board succession planning and renewal programme. The company said David Simpson, Penny Morris and Bill Baker have indicated they would step down from their respective positions.

Aristocrat said Mr Simpson indicated that after six years in the role he would resign as chairman of the company upon the appointment of a successor and also retire as a director.

The company said planning for a replacement chairman has already commenced, with an announcement expected to be made towards the end of 2010.

Aristocrat said Mrs Morris has also indicated that she would retire from the board at the conclusion of the AGM after originally being nominated in August 2003 in order to focus on her other board responsibilities.

Meanwhile, the company said after 12 years Mr Baker wishes to retire from the board this year, with the precise timing yet to be determined.

Aristocrat said as part of the ongoing process of Board renewal, Dr ID Blackburne and Mr SW Morro were recently nominated as directors’ elect, with their appointments subject to certain pending regulatory pre-approvals.

Mr Simpson said his decision to step down later this year along with Mrs Morris and Mr Baker’s retirements are consistent with the company’s interests in ensuring appropriate board renewal.

”The board considers that these retirements, and the anticipated new appointments, will allow us to continue to refresh the Board by bringing additional experiences and new perspectives especially in respect of the critical US market,” Mr Simpson said.

”These changes are particularly important as we guide the Company through its critical 3-5 year turnaround programme.”

As at 1114 AEDT, Aristocrat shares were up 4c to $4.46.

Adamus Resources Limited (ADU) has said it would tap the market for an extra $30.5 million, via a placement and rights issue. The junior miner said the funds would be put towards providing additional capital and accelerating exploration activities at the company’s Southern Ashanti Project in Ghana.

Under the terms of the capital raising, Adamus said it would place 25 million shares at 36c per share, to raise $9 million.

A further $21.5 million would be raised from a 1-for-5 renounceable rights issue, also at 36c per share.

”The Company will now have financial capacity to undertake additional exploration in 2010 aimed at expanding our existing Ore Reserve and Mineral Resource base as we develop the mine,” managing director Mark Bojanjac said.

“To date, Adamus is on time and on budget in its construction of the Project. As such, we are well on track to becoming a 100,000+ oz pa gold producer within 12 months as planned.”

At 1059 AEDT, Adamus shares were trading down 2.5c to 37.5c each.

Macmahon Holdings Limited (MAH) requested its shares be placed in trading halt this morning. The engineering contractor said the reason for the request was that it is in final negotiations in respect of a contract. Macmahon requested the trading halt to remain in place until the earlier of the opening of trading this Friday, or when an announcement regarding the contract is released.

Charter Hall Group (CHC) said it raised approximately $50 million from the retail component of its equity raising. The group said $31 million was raised from retail investor participation and $19 million by the Gandel Group as sub-underwriters of the retail entitlement offer. Charter Hall said this was in addition to the institutional component, which raised approximately $171 million. The group said the shortfall in the number of securities applied for by retail securityholders was about 28.5 million shares, which would be issued to Gandel along with 31,865 shares in respect of ineligible foreign retail securityholders. Charter Hall said Gandel’s interest in the group is now 16.1%.

Orica Limited (ORI) said the Federal Court’s decision to uphold an amended assessment by the Australian Taxation Office is estimated to have a negative impact on the company of approximately $192 million. The explosives maker said as 50% of the amount owing on the amended assessment was previously paid, a further cash payment of approximately $126 million may be required by Orica with an after tax effect of approximately $92 million. Orica said has 21 days to appeal the decision.

Aurox Resources Limited (AXO) and Atlas Iron Limited (AGO) have agreed to merge via scheme implementation agreement (“SIA”) that would see Aurox shareholders receive one Atlas share for every three Aurox shares held. Aurox said the merger implies a price per Aurox share of $0.74 based on Atlas’ last closing price of $2.21, representing a premium of 173% on Aurox's last share price of 27c.

The junior iron ore developer said its board has unanimously recommended that, in the absence of a superior proposal, all Aurox security holders vote in favour of the scheme.

Aurox said the merger provides its shareholders the opportunity to participate in Atlas’ rapidly growing production profile, which will position the company as a globally significant iron ore producer.

The company said the merged company would have 187 million tonnes (mt) of DSO resources, exploration targets of 430 to 750mt at 57% to 60% Fe, two Pilbara magnetite projects and a 15,000 square kilometer Pilbara landholding, and a DSO production target of 26mtpa by 2014.

Managing Director of Aurox, Charles Schaus, said the high premium offered by Atlas is a great deal for Aurox shareholders.

”It reflects the high potential of the Balla Balla project, Aurox’s access to infrastructure and regionally significant water resource,” Mr Schaus said.

“The merged group’s port capacity of up to 33mtpa will allow the company to generate substantial synergies from production and development schedule optimization.”

He added that with iron ore prices expected to increase significantly in the coming year, the merger would give Aurox shareholders the opportunity to share in the benefits from immediate cashflows.

As part of the SIA, Atlas has agreed to extend an unsecured, interest-bearing loan of up $7.7million to Aurox in order to enable Aurox to redeem the outstanding convertible notes which are due to mature on 30 June 2010.

Aurox said the loan would be repayable on the earlier of four months from the date of draw down and 20 business days after termination of the SIA.

The company said the scheme would be subject to customary conditions for a public transaction including shareholder, court and regulatory approvals.

Aurox said the parties have agreed that unless the SIA is terminated, Aurox would not solicit any competing proposal or participate in any discussions or negotiations in relation to any competing bid.

As at 1017 AEDT Aurox and Atlas shares were halted at 27c and $2.21 respectively.

SEEK Limited (SEK) said it has increased its stake Malaysian based provider of employment websites JobStreet Corporation Berhad from 10.1% to 21.3% after paying a consideration of $23.5 million. The company said JobStreet has strong market positions in Malaysia, Singapore and the Philippines, as well as a significant shareholding in the leading Taiwanese online employment provider 104 Corporation.

Seek said it has received the cooperation of Jobstreet’s founders and management team who collectively are also substantial shareholders in Jobstreet.

As part of this transaction, Seek said these shareholders have sold it a 5.6% stake in Jobstreet.

CEO, Andrew Bassat, said the company was impressed with the strong results JobStreet has delivered since its initial acquisition.

“In a rapidly growing regional economy still in the early stages of online migration, we are confident of Jobstreet’s prospects and ability to increase market share,” Mr Bassat said.

“We also believe we can make a significant contribution to Jobstreet by providing strategic support and sharing expertise across the operations.”

At the close of trade Tuesday, Seek shares were trading at $7.55.