ASX 200 rebounds on surging tech stocks, week's loss halved in one day

Today in Review

Markets

ASX 200 Session Chart

The S&P/ASX200 (XJO) finished 74.7 points higher at 7,421.2, 1.02% from its session high/low and just 0.34% from its high/low. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 193 to 75 – a major turnaround from the last couple of sessions.

Despite today's TGIF move, for the week, the XJO finished down 77.1 points or 1.04% lower.

The S&P/ASX 200 Information Technology Sector (XIJ), rising just over +3%. We've looked closely at the rebounding techincals in this index recently, so after today's performance it's worth another check.

The XIJ continues its rally from the long term uptrend ribbon, which so often acts an an area of dynamic support. The short term uptrend ribbon is also providing dynamic support and is nicely reestablishing to the upside. All signs of excess demand.

Today's massive white candle, with its high close, is another excellent signal the sector is in a state of excess demand. If the XIJ can close above the 2 January peak at 1851.3, then there's little in the way of overhead resistance until the August 2023 high at 1946.2.

Also doing well today was the Health Care Sector (XHJ) +2.13% and the Consumer Discretionary Sector (XDJ) +1.20%. Both sectors are showing very strong short term uptrends. I've shown you the chart of the XDJ several times over the last couple of weeks, so today let's focus on the XHJ, home to the likes of CSL, Cochlear (COH), and Resmed (RMD).

The Healthcare sector is showing a strong short term uptrend, but requires a little more work to confirm the long term trend has switched back to up. Ordinarily I could make an early call on this, that is, prior to the long term trend ribbon switching to green, if I see the formation of at least one trough above the long term trend ribbon.

This demonstrates the long term trend ribbon is likely transitioning back to providing dynamic support (as opposed to the dynamic resistance it provides in a long term downtrend). Today's large white candle with its high close is an excellent signal a new point of demand has formed (i.e., at yesterday's now trough low of 41469).

A close above the minor point of supply at 11 January's high of 42938 could facilitate a move back to the June 2023 highs at 45160.

Economy

• No major economic data today!

What to watch out for...

Tonight (from 02:00am):

• US Prelim UoM Consumer Sentiment, forecast 69.8
  
• US Existing Home Sales, forecast 3.83 million
  

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Interesting Movers

Trading higher

• +13.2% Mesoblast (MSB) - FDA Grants Rare Pediatric Disease Designation for Revascor
• +11.4% Zip Co (ZIP) - Upgraded to buy from hold at Ord Minnett; Price Target: $0.75 from $0.42
• +9.9% EML Payments (EML) - No news since 18-Jan EML Payments to exit 'PCSIL' business
• +7.7% Beacon Lighting Group (BLX) - No news, rally is consistent with strong Consumer Discretionary sector, and with prevailing short and long term uptrends
• +7.0% Jumbo Interactive (JIN) - No news, rally is consistent with strong Consumer Discretionary and Information Technology sectors
• +6.0% The Lottery Corporation (TLC) - No news, rally is consistent with strong Consumer Discretionary and Information Technology sectors
• +4.9% Yancoal Australia (YAL) - Quarterly Activities Report
• +4.8% Xero (XRO) - No news, rally is consistent with strong Informaion Technology sector, and with prevailing short and long term uptrends
• +4.5% Weebit Nano (WBT) - No news, rally is consistent with strong Informaion Technology sector
• +4.5% Pexa Group (PXA) - No news, rally is consistent with strong Informaion Technology sector
• +4.5% Stanmore Resources (SMR) - No news since 18-Jan Change in substantial holding, rally is consistent with stronger Coal sector
• +4.0% Coronado Global Resources Inc. (CRN) - Change in substantial holding, rally is consistent with stronger Coal sector

Trading lower

• -6.1% Deep Yellow (DYL) - No news since 18-Jan December 2023 Quarterly Activities Report, speculation of an impending capital raise in the media, general weakness in the Uranium sector
• -3.4% Australian Finance Group (AFG) - No news since 18-Jan AFG December 2023 Quarter Index
• -3.3% Lycopodium (LYL) - No news 🤔
• -3.2% Boss Energy (BOE) - No news, general weakness in the Uranium sector
• -3.1% Emerald Resources (EMR) - No news 🤔
• -2.9% KMD Brands (KMD) - No news, fall is consistent with prevailing short and long term downtrends
• -2.7% Immutep (IMM) - No news since 15-Jan Change in substantial holding
• -2.7% Perenti (PRN) - No news since 18-Jan Perenti secures A$420 million of contract extensions, fall is consistent with prevailing short and long term downtrends
• -2.6% Select Harvests (SHV) - No news, fall is consistent with prevailing short and long term downtrends
• -2.5% APM Human Services International (APM) - No news since 17-Jan First Half Trading Update, fall is consistent with prevailing short and long term downtrends

Broker Notes

• The A2 Milk Company (A2M) retained at buy Citi; Price Target: $4.81
• Australian Finance Group (AFG) retained at neutral Macquarie; Price Target: $1.54 from $1.46

• Ampol (ALD)

• Retained at outperform Macquarie; Price Target: $38.15
• Retained at buy Goldman Sachs; Price Target: $37.10
• APM Human Services International (APM) downgraded to speculative buy from buy at Euroz Hartleys; Price Target: $1.30 from $2.20

• Alumina (AWC)

• Retained at neutral Citi; Price Target: $1.15
• Retained at buy Goldman Sachs; Price Target: $1.39
• Retained at neutral Macquarie; Price Target: $1.10
• Aurizon Holdings (AZJ) downgraded to neutral from overweight at JP Morgan; Price Target: $3.90

• BHP Group (BHP)

• Retained at buy Goldman Sachs; Price Target: $49.40
• Retained at outperform Macquarie; Price Target: $49.00
• Retained at neutral Citi; Price Target: $49.00
• Deterra Royalties (DRR) retained at neutral Macquarie; Price Target: $4.80
• Ingenia Communities (INA) initiated neutral at Barrenjoey; Price Target: $4.50
• James Hardie Industries (JHX) retained at buy Citi; Price Target: $55.30
• Mount Gibson Iron (MGX) retained at outperform Macquarie; Price Target: $0.55
• NIB Holdings (NHF) retained at buy Citi; Price Target: $8.35
• QBE Insurance Group (QBE) retained at buy Citi; Price Target: $18.00
• Ramsay Health Care (RHC) initiated neutral at UBS; Price Target: $55.00

• Suncorp Group (SUN)

• Retained at buy Goldman Sachs; Price Target: $15.00
• Retained at buy Citi; Price Target: $15.55
• Transurban Group (TCL) downgraded to neutral from overweight at JP Morgan; Price Target: $14.00
• The Lottery Corp. (TLC) upgraded to overweight from neutral at Barrenjoey; Price Target: $5.50 from $5.30
• Zip Co (ZIP) upgraded to buy from hold at Ord Minnett; Price Target: $0.75 from $0.42

Scans

This article first appeared on Market Index on 19 January 2024.