Interdum stultus opportuna loquitur...

Monday, August 08, 2005

OzRant: Monday's Experts...

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Finally! It only took a massive burst from the Mindless Monday Orgasmatron, but finally the market got through The 4400. The fact that this is a bull trap makes it easy to watch and gurgle appreciatively, waiting  for the Short Signal of the Year (yes, even better than my short signal on the way up, which called - with the market at about 4100 - for a pullback to about 3850... it went to almost 4200 thenpulled back to just under 3900).

Frankly, this is precisely the place where dumb bears (and bad analysts) get sweaty palms. The days when everyone jumps on the train, and the tendency is to second-guess analysis and replace it with momentum-following. In other words, to behave like a dumbass 'punter'.

Not this little black duck, I can tell you. I've even stalled on launching the RantFolios (RantPro's Model Portfolios) because frankly I doubt that many people will be bothered with the required hedging - and without hedging it is going to be incredibly hard to pick a balanced set of stocks that will be in the black at the end of the year. It's easier in the small-caps (it always is, because they generate so little investment banking revenue for the ticket clippers,  so they are drasticalyl under-researched), but it's hard even there unless you take on unacceptable risk for the expected outperformance.

The hedging is designed to eliminate market risk at times of poor technical and investment merit - hopefully leaving superior stock selection to provide upside while the hedge instrument insulates against downside (subject to the decay and convexity in the hedge instrument).

Right now, portfolios ought to be 100% hedged against market risk - Valuations are stretched at a time of rising bond yields and a slowing global economy, and technically the market is overextended to buggery (that's a charting term). That ought to leave only non-market outperformance as a residual, plus, if you hedge with futures, the possibility of a gain on the futures and a 'minimal loss' through stock selection. It is not going to be easy over the next few months to generate risk-adjusted nominal returns - almost regardless of where you look across the domestic market cap spectrum, equities are going silly.

Major Market Indices

The broad market - the ASX All Ordinaries (XAO) - rose by 32.10 points (0.74%), finishing at 4365.20 points. The index hit an intraday high of 4369.60 and its low was 4330.4 - Tom Petrovski will be shilling that result like Larry Kudlow shills FedSpeak.

Total volume traded on the ASX was 920 million units, 7.2% below its 10-day average. Of the 483 stocks in the index, 196 rose while 153 fell. Volume was tilted in favour of the gainers by a margin of 1.6:1, with 243.53million shares traded in gainers while 152.80million shares traded in the day's losers.

The Index that forms the cash basis for the SFE's Share Price Index Futures - the S&P/ASX 200 (XJO) - rose by 30.60 points (0.70%), finishing at 4407.90 points. Yippeee! Now that that's over with, we can get on with ignoring it as the market eventually falls back through it.

The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - rose by 25.80 points (1.10%), finishing at 2372.00 points. Within the index members, there were 18 that rose, and 2 losers. Total volume in rising issues within the ASX20 amounted to 72.73m shares while volume in the losers totalled 6.18m units.

The major winners in the "big guns" were -

  • Woodside Petroleum (WPL), +$1.530 (5.03%) to $31.920 on volume of 3.15m shares - gyrating about in response to oil prices, with the added bonus of an announcement regarding a WA gas project;
  • Commonwealth Bank Of Australia (CBA), +$0.680 (1.76%) to $39.380 on volume of 3.17m shares;
  • BHP Billiton (BHP), +$0.320 (1.63%) to $19.920 on volume of 13.21m shares;
  • News Corporation (NWS), +$0.350 (1.57%) to $22.650 on volume of 1.96m shares; and
  • Telstra Corporation (TLS), +$0.070 (1.41%) to $5.030 on volume of 15.47m shares.

The only two losers in the big-guns:

  • Westfield Group (WDC), -$0.17 (0.94%) to $17.90 on volume of 3.37m shares; and
  • Coles Myer Ltd (CML), -$0.08 (0.81%) to $9.75 on volume of 2.82m shares.

At the smaller end of the market's capitalisation scale, the ASX Small Ordinaries Index (XSO) - the only place where underexploited value exists with any regularity - rose by 13.70 points (0.56%), finishing at 2477.70 points. The major winners in the "pop-guns" were -

  • Mosaic Oil (MOS), +$0.030 (15.79%) to $0.220 on volume of 34.3m shares;
  • Grand Hotel Group (GHG), +$0.070 (8.54%) to $0.890 on volume of 719,000 shares; and
  • Ventracor (VCR), +$0.105 (8.02%) to $1.415 on volume of 2.5m shares; and
  • Resolute Mining (RSG), +$0.090 (7.5%) to $1.290 on volume of 1.36m shares; and
  • Repco Corporation (RCL), +$0.210 (7.34%) to $3.070 on volume of 1.1m shares.

The losingest-little-guys for the session were (in order of decline):

  • Dragon Mining (DRA), -$0.010 (5.41%) to $0.175 on volume of 276,000 shares;
  • Lynas Corporation (LYC), -$0.005 (3.85%) to $0.125 on volume of 583,000 shares; and
  • Amalgamated Holdings (AHD), -$0.190 (3.85%) to $4.750 on volume of 25,000 shares; and
  • Macquarie Leisure Trust Group (MLE), -$0.060 (3.03%) to $1.920 on volume of 118,000 shares; and
  • Galileo Shopping America Trust (GSA), -$0.035 (2.94%) to $1.155 on volume of 1.31m shares.
Index Changes
XAOAll Ordinaries4365.232.10.74%533.78m
XTLS&P/ASX 20237225.81.1%78.91m
XFLS&P/ASX 504342.734.70.81%157.97m
XTOS&P/ASX 1003578.925.20.71%262.2m
XJOS&P/ASX 2004407.930.60.7%354.77m
XKOS&P/ASX 3004401.130.40.7%0
XMDS&P/ASX Mid-Cap 504271.56.90.16%0
XSOS&P/ASX Small Ordinaries2477.713.70.56%208.73m

All Ordinaries Market Internals

Market Breadth

Advancing Volume72.73m132.32m173.11m243.5396.24496.77
Declining Volume6.18m100.85m124.18m152.835.05284.06

S&P/ASX200 GICS Sector Indices

The top sector for the day was XEJ Energy which gained 2.94% to 9984.40 points. The sector was helped by

  • Woodside Petroleum (WPL), +$1.530 (5.03%) to $31.920 on volume of 3.15m shares;
  • Roc Oil Company (ROC), +$0.110 (4.74%) to $2.430 on volume of 1.42m shares;
  • Tap Oil (TAP), +$0.080 (2.8%) to $2.940 on volume of 1.63m shares;
  • Australian Worldwide Exploration (AWE), +$0.060 (2.79%) to $2.210 on volume of 4.55m shares; and
  • Caltex Australia (CTX), +$0.420 (2.47%) to $17.390 on volume of 579,000 shares.

Second in the sector leadership stakes was XTJ Telecommunications which gained 1.11% to 1790.70 points. The sector leader - Telstra - rose, while Telecom NZ had a downer:

  • Telstra Corporation (TLS), +$0.070 (1.41%) to $5.030 on volume of 15.47m shares; and
  • Telecom Corporation Of New Zealand (TEL), -$0.030 (0.53%) to $5.650 on volume of 3.96m shares.

The bronze today went toXXJ ASX200 Financials ex Property Trusts which gained 0.94% to 5268.50 points. The sector was led by

  • FKP Property Group (FKP), +$0.120 (3.31%) to $3.740 on volume of 1.1m shares;
  • SFE Corporation (SFE), +$0.300 (2.73%) to $11.300 on volume of 403,000 shares;
  • Record Investments (RCD), +$0.130 (2.25%) to $5.900 on volume of 420,000 shares;
  • Australand Property Group (ALZ), +$0.030 (1.8%) to $1.700 on volume of 2.15m shares; and
  • Promina Group (PMN), +$0.090 (1.79%) to $5.110 on volume of 3.32m shares.

The worst-performed sector today was XPJ Property Trusts which lost 0.94% to 1849.90 points. The sector was dragged lower by

  • Galileo Shopping America Trust (GSA), -$0.035 (2.94%) to $1.155 on volume of 1.31m shares;
  • General Property Trust (GPT), -$0.090 (2.31%) to $3.810 on volume of 4.28m shares; and
  • Stockland (SGP), -$0.090 (1.51%) to $5.870 on volume of 1.69m shares; and
  • ING Office Fund (IOF), -$0.020 (1.51%) to $1.305 on volume of 5.95m shares; and
  • Macquarie Ddr Trust (MDT), -$0.015 (1.26%) to $1.175 on volume of 3.11m shares.

Just in front of last place on the sector table was XHJ Healthcare which actually gained 0.12% to 5322.20 points - in other words, Plopperty Trusts was the only sector to drop today.

Sector Indices
CodeGICS SectorClose+/-%Volume
XXJASX200 Financials ex Property Trusts5268.549.20.94%43.73m
XDJConsumer Discretionary2274.121.20.94%27.25m
XIJInformation Technology4182.80.67%4.25m
XSJConsumer Staples5684.318.20.32%28.63m
XPJProperty Trusts1849.9-17.5-0.94%67.8m

All Ordinaries Major Movers

All Ords Volume Leaders
MOSMosaic Oil0.220.0315.79%34.3m
AZRAztec Resources0.180.029.09%18.41m
DYLDeep Yellow0.140.013.85%16m
TLSTelstra Corporation5.030.071.41%15.47m
BHPBHP Billiton19.920.321.63%13.21m
LHGLihir Gold1.39-0.04-2.46%11.13m

All Ords Percentage Gainers
CMKCumnock Coal0.820.2338.98%135305
MOSMosaic Oil0.220.0315.79%34.3m
GHGGrand Hotel Group0.890.078.54%718627

All Ords Percentage Decliners
BOCBougainville Copper0.72-0.08-9.43%93425
CAGCape Range Wireless0.03-0.002-6.25%1.69m
PBDPort Bouvard1.45-0.09-5.56%58230
PNAPan Australian Resources0.23-0.01-4.17%3.39m
LYCLynas Corporation0.13-0.01-3.85%583288

Elsewhere in the Region...

Regional Indices
New ZealandNZSE503343.403-5.27-0.16%19.44m
JapanNikkei 22511778.9812.50.11%0
SingaporeStraits Times2345.536.660.28%0
Hong KongHang Seng15078.1426.820.18%107.19m
MalaysiaKLSE Comp947.84.390.47%0