Today we’ll discuss how you can trade smarter using options.

Options afford traders the opportunity to achieve their objectives and/or trades in the market in ways that might not otherwise be available to them, while limiting risks, particularly in volatile markets. Using options can also be a way to buy yourself time while deciding what you want to do with your stock position, as there may be dividend and capital gains tax considerations.

Option contracts provide traders with an enormous amount of leverage. In Australia, 1 option contract represents 100 underlying shares. Therefore, with a relatively small amount of money an option trader can control a very large underlying stock position.

Options are some of the most flexible instruments available to traders. However options trading can also be a risky venture for the inexperienced, because of the leverage involved. Of course, option trading can make you very large returns in a small amount of time, but can also turn into losses if you are not aware of the dynamics of options trading.

An option trader might take a view on a weekly, monthly or quarterly direction for a particular stock, whether that be a short or long position and can trade in either direction with the same ease.

Free Options Webinar, Tuesday 28 May

Next week D2MX Advisory will be providing a free webinar, Taking The Mystery Out Of Options!

This webinar is aimed at beginners and intermediate traders who would like to learn more about options and how they work. No previous knowledge of options is necessary.

Topics covered include:
» The market outlook for when simple options trading may be appropriate
» Potential profits and losses
» Follow-up action if required
» The effect on the strategy of time decay and changes in volatility
» Call and Put options
» Buying and selling options
» and some practical examples for traders and investors

Register your place here »

Newcrest Mining – Short Position

In the webinar we will show you how we turned a profit on a Newcrest option trade (a possible 500% in 10 days).

Newcrest has been sold off severely and the Gold price continues to fall

Westpac Bank – Hedge

Another trade that may be of interest to you is one we did in Westpac Bank, where we picked up the dividend and are currently running a hedged position with 250% profit on the option used for our hedge protection.

Westpac Bank had a fantastic run into going Ex-div, we opted for protection.

Bonus

In the Taking The Mystery Out Of Options! Webinar we will show how these trades were placed and how we used options to trade our market view.

So join Jonathan Tacadena from D2MX Advisory as he explains options in simple terms and as a bonus we will give you a short-term and a medium-term trade that we believe has a high probability of turning a profit for you.

The ASX website also provides some good material for options traders and has produced a poster with a summary of the most widely used strategies for various different market conditions:
» ASX Options Strategies

For more trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, which provides a daily serving of insightful market analysis and trade recommendations from the D2MX Advisory team.

To request an obligation-free trial, call 1300 610 024, email advisory@d2mx.com.au or register online at www.d2mx.com.au.

Michael Hevern
Investment Adviser – D2MX Advisory

See Also: Options Trading for All Types of Market Environments

Part 1: The Protective Put
Part 2: The Covered Call
Part 3: The Covered Call Collar
Part 4: The Stock Repair Strategy
Part 5: Limited Risk Short Selling Strategy
Part 7: Dividend Capture Covered Call Collar
Part 8: Hedging With a Bear Put Spread
Part 9: The Bull Call Strategy
Part 10: Dividend Capture Covered Call Collar
Part 11: Calendar Call Strategy
Part 12: Bull Call Spread Strategy
Part 13: Reverse Calendar Call Strategy
Part 14: Short Selling Strategy with a Hedge
Part 15: Alternate Profit Taking Strategy
Part 16: Bullish on the Cheap

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

Amongst other new features, the next release will include the Keltner Channels Indicator and a quick way to draw Support Lines.

You can read more about Keltner Channels here.

A Support Line button has been added to the left hand drawing toolbar.  Pressing the new Support Line button places the chart into trend line drawing mode, but will only permit trend lines to be drawn horizontally, until you left-mouse click to finish.  

(You can do the same by holding your Shift key with normal trend lines, but not all users are aware of that power feature…have you seen what holding your Alt key does while placing indicators?)

These two features have been added, based on member feedback and requests. We’re always interested in considering your ideas, so get in touch!

The Aussie market backed off  sharply from 5-year highs, testing the 5050 and is looking to open modestly higher today, as stock prices closed dropped sharply in Europe, but held in the US.  The precipitous fall in the Aussie dollar has triggered a wave of selling from overseas investors as they look to repatriate their hard earned profits of recent times.

SPI Futures is trading just above the key level of 5050, ended up 0.3% (or  16 points) at 5,086. The key levels for the ASX200 index today are 5040 to 5120.    The Aussie dollar was slammed yesterday down towards US96c, but managed to rebound overnight.

Testing times for the Aussie Market as the SPI Futures hold critical support.

See below for ASX listed companies in the news today.

US Markets

US stock markets held their ground overnight, after early weakness, but recorded their first consecutive falls in a month.

The three benchmark indexes all ended down around -0.2% for the session. The Dow Jones remained around the 15,300 level. The S&P500 again held above the 1650 level around all-time highs. Markets are testing the 13-day support level at this time, and the “buy-on-the-dip” mentality will be tested.

The ten S&P sectors primarily ended lower with falls led by the Utilities sector down -2.4% in the past 2-days, while Financial and Consumer discretionary sectors all down -0.5% overnight, closely followed by Industrials and Consumer Staples down -0.2%, while Materials and Energy ened flat for the session. The S&P index of homebuilders added 1 percent as 10 out of its 11 members gained.

US stocks held despite a contraction in China manufacturing and as investors weighed Federal Reserve stimulus comments, and the American housing data. Traders are trying to digest the comments from the Fed Chairman Ben Bernanke who in prepared remarks to Congress that a premature withdrawal of quantitative easing would put the economic recovery at risk, but in further remarks revealed the Fed could “step down” the pace of asset purchases in the next few meetings if the labour market continues to improve and “we have confidence that that is going to be sustained”.

The S&P 500 has risen for past 6-months without a 5% pullback but yesterday’s the 2.5% turnaround may portend further weakness/profit-taking in the near-term.

For the session Dow Jones closed down -0.1% at 15,295, the S&P500 closed down -0.3% at 1,651, and the NASDAQ closed down -0.1% at 3,459.

European Markets

Asian Markets

Asian stock markets plunged yesterday, recording there biggest falls since September 2011 and backing off 5-year highs, as the financial sector weighed again.

The MSCI Asia Pacific Index fell -3.4% for the session. Paring the index gains for the year back to below 7%. Sellers stepped in after Chinese manufacturing data confirmed contraction and there is a spectre of reising interet rates in Japan.

In Japan the market plummeted over -7% as 12 stocks fell for every one that rose. Traders were looking for an excuse to take profits as the index pushed above the 15,600 at its highest level since December 2007. The index fell the most since the aftermath of the March 2011 tsunami and nuclear disasters and triggered a trading halt in Nikkei 225 Stock Average futures trading in Osaka at one point.

The Chinese market fell for a second session, falling away after it recorded its longest winning streak in 3-months. The Shanghai Composite is now flat for the year (having fallen as much as -9% from its February peak), and yesterday the market fell. Traders sold after the HSBC “Flash PMI” release from China that showed manufacturing in the world’s second largest economy is contracting for the first time in seven months. The preliminary reading of a purchasing managers’ index declined to 49.6 in May from 50.4 in April. A reading below 50 marks contraction.

For the session the Chinese Shanghai Composite closed down -1.2% at 2,276, the Hong Kong Hang Seng closed down -2.5% at 22,670, and the Japanese Nikkei closed down -7.3% at 14,484, while the South Korean KOSPI closed down -1.2% at 1,969.

Commodities

The Dollar Index was higher at 83.75 on a lower Euro, and the Aussie Dollar closed  down  at 0.9744.  Commodities prices traded mixed.

Overnight the COMEX WTI Crude for MAY13 delivery  closed  down 0.0% at $US94.25, the COMEX Copper for May 13 delivery  closed  down -2.3% at 3.304, the COMEX Gold for JUN13 delivery  closed up 1.8% at $US1,391.80.

ASX News Today

AAC – Agricultural Company he cattle farmer Australian is continuing to negotiate the sale of a major piece of land in Queensland after it was passed in at auction.

BANKs – Banks have sold off heavily as foreign investors take profits as the Aussie dollar crumbles, falling below US96c today.

BTU – Bathurst Resources; conservation group Forest & Bird and the Greens have slammed the government’s decision to allow an Australian company to develop a new open-cast coal mine on conservation land near Westport in exchange for $22 million.

CWN – Crown, the casino company controlled by billionaire James Packer, has sold its entire 10% stake in rival Echo Entertainment Group for about $264 million around 3.20/share, a 7% discount.

DLX – DuluxGroup has stopped supplying its premium paint and woodcare products from Masters and Danks corporate stores to work more closely with other partners.

JHX – James Hardie’s full year net profit has fallen significantly because of changes to its asbestos liabilities and the impact of legal battles with the tax office.

MYR – Myer says sales have grown slightly, but the department store remains cautious about the future for the retail industry.

SWM – US private equity firm KKR is to sell its entire 12 percent stake in Seven West Media, worth about $265 million, cutting its ties to Seven after an almost seven-year partnership.

TLS – Telstra is not saying how many jobs may be lost as part of a major restructure of its internal operations.

Market Summary

ASX – to open lower
US & UK/Europe – US flat, EU lower.

US ADRs – Broadly flat!!…

ANZ -2.8%, NAB -1.9%
BHP -1.2%, RIO -1.6%, NEM 0.8%

By Michael Hevern
D2MX Investment Advisor

For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

In the current software, the Analyser scanning tool only allows you to run your scans on the latest data.

However, we’re now working on adding the ability to run the Analyser Scans on any date you select, not just today.  

This will let you run scans in the morning for the prior day’s close, and gives you another option for looking at historical scan results.  (The first option being the Trading System Back Tester.)

We’ve also tweaked the system to ensure that you have the latest data, every time you run a live scan (assuming you have a live data subscription).

Example of running the Analyser on a specific date of data

This feature, along with other enhancements, will be made available in the next release of the software scheduled for early June, and affects the Market Analyser, d2mxIRESS, Bourse, Virtual Trader and PTP 5000 editions.

If you’re not using one of these products, get a free trial to test out the Analyser market scanning features for yourself.

The Aussie market is backing off 5-year highs, weakening below the 5200 and is looking to open lower today, as stock prices closed flat in Europe, but ended sharply lower in the US after news from the Fed.  The RBA said record-low rates are “appropriate to encourage sustainable growth” as business confidence was cited as remaining weak.

SPI Futures is trading just above the key level of 5200, ended down -0.4% (or  -20 points) at 5,151. The key levels for the ASX200 index today are 5120 to 5180.    The Aussie dollar was slammed overnight down towards US96c.

In economic data we have Manufacturing PMI data from Europe and China today.

Key day reversal on the S&P500 index may trigger test of 50-day moving average near-term – would need to see follow-through tonight for confirmation.

See below for ASX listed companies in the news today.

US Markets

US stock markets reversed early gains sharply overnight, due to concerns that the Federal Reserve will scale back its stimulus efforts if the labor market continues to improve.

The three benchmark indexes all ended down around -0.8% for the session. The Dow Jones remained around the 15,300 level. The S&P500 again held above the 1650 level around all-time highs, but the markets reversed early gains sharply and ended up giving back all the gains of the past 3-days. It will be a testing night tonight as the 13-day support level will be under pressure.

All ten S&P sectors ended lower with falls led by the Utilities, Materials and Telecom sectors all down -1.2%, closed followed by Financial, Energy and Industrials.

US stocks initially rallied after Fed Chairman Ben Bernanke said in prepared remarks to Congress that a premature withdrawal of quantitative easing would put the economic recovery at risk. Traders started selling after further remarks revealed the Fed could “step down” the pace of asset purchases in the next few meetings if the labour market continues to improve and “we have confidence that that is going to be sustained”.

The S&P 500 has risen for past 6-months without a 5% pullback and the 2.5% turnaround overnight may portend further weakness/profit-taking in the near-term. In commodities gold and silver eased again after the comments from the Fed overnight

For the session Dow Jones closed down -0.5% at 15,307, the S&P500 closed down -0.8% at 1,655, and the NASDAQ closed down -1.1% at 3,463.

European Markets

Asian Markets

Asian stock markets eased back from 5-year highs, as the financial sector weighed again.

The MSCI Asia Pacific Index fell -0.1% for the session. The index is up 10% for the year and is on track for the longest winning streak since September 2009, on optimism over central bank stimulus, Japan will continuing to deploy more measures to beat deflation and as centrals banks remain supportive in the US and Europe.

In Japan the market pushed above the 15,600 at its highest level since December 2007, as exporters gained on the back of a weaker yen.

The Chinese market fell for the first time in 6-days, but has still risen 6% in the past week and has recorded its longest winning streak in 3-months, as the Shanghai Composite is now in the positive for the year (having fallen as much as -9% from its February peak), and yesterday the market fell as declines by technology and energy producers overshadowed gains in the property and consumer staples sectors. In Hong Kong the market eased as well.

For the session the Chinese Shanghai Composite closed down -0.1% at 2,302, the Hong Kong Hang Seng closed down -0.5% at 23,261, and the Japanese Nikkei closed up 1.6% at 15,627, while the South Korean KOSPI closed up 0.6% at 1,994.

Commodities

The Dollar Index was higher at 84.25 on a lower Euro, and the Aussie Dollar closed down at 0.9693.  Commodities prices traded lower.

Overnight the COMEX WTI Crude for MAY13 delivery closed down -2.0% at $US94.28, the COMEX Copper for May 13 delivery closed up 1.1% at 3.381, the COMEX Gold for JUN13 delivery closed down -0.7% at $US1,367.40.

ASX News Today

ABC – Adelaide Brighton the cement and lime manufacturer, expects net profit in 2013 to be flat or slightly below 2012 levels due to the effects of weak demand and the carbon tax.

BHP – BHP the mining giant is refusing to hire local workers for its two new central Queensland coal mines, a union claims.

EGP – Echo entertainment says a levy will be imposed on Sydney’s Star casino to help cover the cost of monitoring and regulating its operations.

ILU – Iluka Resources says lower prices for its mineral sands will cause a fall in earnings in 2013.

MQG – MacBank increased their hybrid offer from $4oom to $600m due to its popularity.

MYR – Myer says sales have grown slightly, but the department store remains cautious about the future for the retail industry.

SWM – US private equity firm KKR is to sell its entire 12 percent stake in Seven West Media, worth about $265 million, cutting its ties to Seven after an almost seven-year partnership.

RIO – Rio Tinto says workers at a Newcastle coal terminal will stop work for eight hours on Friday as part of an ongoing industrial dispute at the facility.

Market Summary

ASX – to open lower
US & UK/Europe – US lower, EU flat.

US ADRs – Sharply  lower!!…

ANZ +3.3%, NAB -3.3%
BHP +1.2%, RIO -0.2%, NEM -1.1%

By Michael Hevern
D2MX Investment Advisor

For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

The Aussie market held at 5-year highs, just below the 5200 and is looking to open higher today, as stock prices closed flat in Europe, but ended higher in the US.  The RBA released minutes of its May meeting in which it described a cut to record-low rates as “appropriate to encourage sustainable growth” as business confidence was cited as remaining weak.

SPI Futures is trading just above the key level of 5200, ended down -0.1% (or  -5 points) at 5,187. The key levels for the ASX200 index today are 5160 to 5230.  Expect gold miners to see some profit-taking, as gold retraced overnight, as gold held below the $1,400 level and also iron ore prices now down over 20% from its February highs.

It will be busy later on this week for economic data with Manufacturing PMI data from Europe and China and from the US FOMC meeting minutes and Trade data.

German market grinds higher for an eleventh straight session.

See below for ASX listed companies in the news today.

US Markets

US stock markets rose overnight, after St. Louis Federal Reserve Bank President James Bullard said the central bank should continue its bond buying to boost growth.

The three benchmark indexes all ended up 0.2% for the session. The Dow Jones remained around the 15,350 level. The S&P500 again held above the 1660 level at all-time highs and has closed higher for eleven of the last foruteen trading sessions (up 17% for the year). The gains have been broad based as over 85 percent of S&P 500 stocks are trading above their 50 gay moving average, according to Bloomberg (the highest level since 14 March).

The ten S&P sectors ended mixed with gains led by the Healthcare up sector over 1.1%, followed by Financials and Consumer Staple sectors ended up around 0.4%, while falls were led by Energy and Technology sectors ended down around -0.3%.

Goldman Sachs has forecast the US stock market rally may last at least another 2 1/2 years and send the S&P 500 up 26 percent to 2,100, based on a repeat of the 90′s, predicting it will finish 2013 at 1,750 and 2014 at 1,900 as stock valuations increase. Stock prices have held on to gains since the Fed Chairman Ben Bernanke confirmed that the Fed will continue its unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent. The S&P 500 has risen for past 6-months without a 5% pullback.

In commodities gold and silver eased after the comments from James Bullard. The focus will be on the Fed tonight, with the Fed chairman, Ben Bernanke testifying before Congress on the outlook for the US economy and the FOMC also releases the minutes of its April.

For the session Dow Jones closed up 0.3% at 15,388, the S&P500 closed up 0.2% at 1,669, and the NASDAQ closed up 0.2% at 3,502.

European Markets

Asian Markets

Asian stock markets eased back from 5-year highs, as the financial sector weigh.

The MSCI Asia Pacific Index fell -0.3% for the session. The index is up 10% for the year and is on track for the longest winning streak since September 2009, on optimism over central bank stimulus, Japan will continuing to deploy more measures to beat deflation and as centrals banks remain supportive in the US and Europe.

In Japan the market rose holding above 15,300 at its highest level since December 2007, as exporters gained on the back of a weaker yen.

The Chinese market continued higher again, up for a fifth day, up 6% in that time and recording its longest winning streak in 3-months, as the Shanghai Composite is now in the positive for the year, having fallen as much as -9% from its February peak.  The buyers have jumped in on speculation that the government is accelerating economic reform after saying investment projects for airports and gas fields won’t need pre-approval any more.  In Hong Kong the market eased .

For the session the Chinese Shanghai Composite closed up 0.2% at 2,305, the Hong Kong Hang Seng closed down -0.5% at 23,366, and the Japanese Nikkei closed up 0.1% at 15,381, while the South Korean KOSPI closed down -0.1% at 1,981.

Commodities

The Dollar Index was higher at 83.77 on a lower Euro, and the Aussie Dollar closed up at 0.9810..  Commodities prices traded lower.

Overnight the COMEX WTI Crude for MAY13 delivery closed down -0.6% at $US96.16, the COMEX Copper for May 13 delivery closed down -0.5% at 3.344, the COMEX Gold for JUN13 delivery closed down -0.5% at $US1,377.60.

ASX News Today

LEI – Leighton Holdings the construction giant says it’s not concerned about the recent woes of mining services companies due to its diverse business interests and cyclical nature of the industry.

MQG – MacBank increased their hybrid offer from $4oom to $600m due to its popularity.

NWS – News Limited has sold NRL club Melbourne to a private consortium gathered by NZ entrepreneur Bart Campbell.

RHL – Ruralco’s says earnings, hot and dry conditions have burned agribusiness sparking a half-year loss only a year after it yielded a $10 million profit.

RIO – Rio Tinto says Workers at a Newcastle coal terminal will stop work for eight hours on Friday as part of an ongoing industrial dispute at the facility.

SWM – Seven West Media boss Tim Worner has pledged to focus on producing quality content while cutting costs.

TGA – Thorn Group, says people with bad credit histories are flocking to the Radio Rentals’ brand, helping boost the revenues of its parent company by eight percent.

TSE – Transfield Services the the mining engineer has wiped nearly $141 million from the value, as a result of cost cutting in the mining sector

SGT – Optus says its rollout of its 4G network is expected to reach 70 percent of Australia’s metropolitan population by the middle of 2014.

Market Summary

ASX – to open higher
US & UK/Europe – US higher, EU flat.

US ADRs – Broadly  higher!!…

ANZ +1.9%, NAB -0.6%
BHP +1.6%, RIO +0.9%, NEM -1.1%

By Michael Hevern
D2MX Investment Advisor

For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

This webinar is aimed at beginners and intermediate traders who want to learn more about options and how they work. No previous knowledge of options is necessary, and you don’t need to be a client to attend.

WHEN: Tuesday, May 28 7:00pm – 8:00pm AEST **next Tuesday!**
HOW: Register here

Topics covered will include:

• An introduction to options
• Call & Put options
• Buying & selling options
• Practical examples for traders and investors

Register your place at https://attendee.gotowebinar.com/register/5559679796742476800

We look forward to seeing you online!
 
 

The Aussie market held at 5-year highs, above the 5200 and is looking to open higher today, as stock prices closed higher in Europe, but ended flat in the US.

SPI Futures is trading just above the key level of 5200, ended up 0.1% (or  7 points) at 5,227. The key levels for the ASX200 index today are 5180 to 5270.  Expect miners to see some support, as gold rebounded overnight, but gold still held below the $1,400 level and iron ore prices now down over 20% from its February highs.

It will be busy later in the week for economic data with Manufacturing PMI data from Europe and China and from the US FOMC meeting minutes and Trade data.

Gold finds support on the back of Moody’s downgrade warning for the US.

See below for ASX listed companies in the news today.

US Markets

US stock markets eased overnight, after Moody’s said the US may face a downgrade.

The three benchmark indexes all ended down -0.1% for the session. The Dow Jones remained around the 15,350 level. The S&P500 again held above the 1660 level at all-time highs and has closed higher for ten of the last thirteen trading sessions (up 17% for the year).  Around 200 of the S&P500 stocks are at 52-week highs, the most since 1993.  The gains have been broad based as over 85 percent of S&P 500 stocks are trading above their 50 gay moving average, according to Bloomberg (the highest level since 14 March).  

The ten S&P sectors ended mixed with gains led by the Energy up sector over 1.4%,  followed by Financials and Industrials up 0.2%, while falls were led by Healthcare and  Consumer Staple sectors ended down around -0.7%.

Stock prices have been rising since the Fed Chairman Ben Bernanke confirmed that the Fed will continue its unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent.  The S&P 500 has risen for past 6-months without a 5% pullback.

In commodities gold and silver rebounded after Moody’s Investors Service said US policy makers must address debt issues to avoid a credit-rating downgrade this year, sparking buy in the metals as a “safe haven”.

For the session Dow Jones closed down -0.1% at 15,335, the S&P500 closed down -0.1% at 1,666, and the NASDAQ closed down -0.1% at 3,496.

European Markets

Asian Markets

Asian stock markets ended higher yesterday  after ending higher for a second week, holding around its 5-year highs.

The MSCI Asia Pacific Index rose 0.4% for the session. The index is up 10% for the year and is on track for the longest winning streak since September 2009, on optimism over central bank stimulus, Japan will continuing to deploy more measures to beat deflation and as centrals banks remain supportive in the US and Europe.

In Japan the market rose holding above 15,300 at its highest level since December 2007, as exporters gained on the back of a weaker yen.

The Chinese market again saw some bargain hunting, as the Shanghai Composite is now in the positive for the year, having fallen as much as -9% from its February peak.  Property developers were higher after government data showed that housing prices continued to rise in April.  In Hong Kong the market also rose as traders speculated the government will not impose additional property curbs as the economy slows.

Of the around 430 companies on the MSCI Asia Pacific Index that reported their latest quarterly results since April, 53 percent have beaten analyst forecasts, according to Bloomberg.

For the session the Chinese Shanghai Composite closed up 0.7% at 2,300, the Hong Kong Hang Seng closed up 1.8% at 23,493, and the Japanese Nikkei closed up 1.5% at 15,361, while the South Korean KOSPI closed down 0.0% at 1,982.

Commodities

The Dollar Index was higher at 83.77 on a lower Euro, and the Aussie Dollar closed up at 0.9818.  Commodities prices traded higher.

Overnight the COMEX WTI Crude for MAY13 delivery closed up 0.7% at $US96.71, the COMEX Copper for May 13 delivery closed up 1.1% at 3.360, the COMEX Gold for JUN13 delivery closed up 1.4% at $US1,384.10.

ASX News Today

BHP – BHP Billiton, new chief executive Andrew Mackenzie has outlined plans to slash capital spending by almost 20%.

GPT – GPT Group the property owner, has sold its 50 percent stake in the Erina Fair shopping centre on the NSW central coast for $397 million.

LEI – Leighton Holdings the construction giant says it’s not concerned about the recent woes of mining services companies due to its diverse business interests and cyclical nature of the industry.

MQG – MacBank increased their hybrid offer from $4oom to $600m due to its popularity.

SGT – Optus says its rollout of its 4G network is expected to reach 70 percent of Australia’s metropolitan population by the middle of 2014.

MAH – Macmahon Holdings the mining services provider shares surged, after it detailed positive growth in a “changing and challenging environment”.

SYD – Sydney Airport has forecast larger distributions for its shareholders as its number of passengers continues to rise.

WBC – Westpac Bank has has dropped its one year fixed home loan rate for new customers to 4.79 per cent.

WES – Wefarmers is off target after Target’s profits have been hit by a late start to winter, which means Target’s EBITDA will plunge by 40% for FY2013.

WOR – Worley Parson joined other mine service companies down grading their profit forecasts, citing a slowdown in Western Australia’s mining industry for its profit downgrade.

Market Summary

ASX – to open higher
US & UK/Europe – US flat, EU higher.

US ADRs – Broadly  higher!!…

ANZ +0.4%, NAB 1.4%
BHP +0.6%, RIO +1.3%, NEM 5.4%

By Michael Hevern
D2MX Investment Advisor

For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

The Aussie market held at 5-year highs, around the 5200 and is looking to open higher today, as stock prices closed higher in Europe and in the US.

SPI Futures is trading just above the key level of 5200, ended up 0.3% (or  19 points) at 5,212. The key levels for the ASX200 index today are 5200 to 5260.  Expect miners to see some support, but gold miners will still weigh as gold held below the $1,400 level and iron ore prices now down over 20% from its February highs.

It will be a busy week for economic data with Manufacturing PMI data from Europe and China and from the US FOMC meeting minutes and Trade data.

The ASX 200 is set to push higher today.

See below for ASX listed companies in the news today.

US Markets

US stock markets rose for a fourth week, holding at another all-time high as consumer confidence rises.

The three benchmark indexes all ended up 1% for the session. The Dow Jones remained above the 15,350 level. The S&P500 again closed held at the 1660 level at all-time highs and up 2.1% for the week and has closed higher for ten of the last twelve trading sessions (up 17% for the year).  Nearly 200 of the S&P500 stocks are at 52-week highs, the most since 1993.  The gains have been broad based as over 85 percent of S&P 500 stocks are trading above their 50 gay moving average, according to Bloomberg (the highest level since 14 March).

Stock prices have been rising since the Fed Chairman Ben Bernanke confirmed that the Fed will continue its unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent.  All ten S&P sectors ended higher with gains led by the Energy and Industrials up sectors over 1.5%,  followed by Materials and  Technology  sectors all ended  up around 1.0%.   For the month the Dow Jones is up 5.6%, the S&P500 is up 7.6% and the NASDAQ is up 6.3%.

Trader sentiment was boosted as American’s confidence in the economy  rose in May to the highest level in nearly six years as rising real estate values and record  equities prices boosted household wealth.  Elsewhere the index of US leading indicators climbed in April, rebounding from March and iindicating the world’s largest econmony may be poised for further expansion.

For the session Dow Jones closed up 0.8% at 15,354, the S&P500 closed up 0.9% at 1,667, and the NASDAQ closed up 1.0% at 3,498.

European Markets

Asian Markets

Asian stock markets ended higher for a second week, holding around its 5-year highs.

The MSCI Asia Pacific Index ended eased -0.2% for the session. The index is up 10% for the year and is on track for the longest winning streak since September 2009, on optimism over central bank stimulus, Japan will continuing to deploy more measures to beat deflation and as centrals banks remain supportive in the US and Europe.

In Japan the market eased but held above 15,000 at its highest level since December 2007, on the back of a weaker yen. Japanese gross domestic product surprised, rising an annualised 3.5 percent in the three months through March, the most in a year (better than the forecast 2.7%), while fourth-quarter growth was revised to 1 percent.  The yen has fallen 18% this year and every time the yen falls below a key level, the Nikkei passes reached another milestone because it boosts corporate profits, especially for manufacturers and exporters.

The Chinese market saw some bargain hunting, having its best gain in 2-weeks, as the Shanghai Composite is now in the positive for the year, having  fallen as much as  -9% from its February peak.  In Hong Kong the market also rose, despite the Chinese Premier Li Keqiang signaled policy makers are reluctant to use stimulus to counter an economic slowdown.  Traders speculated the government will not impose additional property curbs as the economy slows.

Of the around 420 companies on the MSCI Asia Pacific Index that reported their latest quarterly results since April, 53 percent have beaten analyst forecasts, according to Bloomberg.

For the session the Chinese Shanghai Composite closed up 1.4% at 2,283, the Hong Kong Hang Seng closed up 0.2% at 23,082, and the Japanese Nikkei closed up 0.7% at 15,138, while the South Korean KOSPI closed up 0.8% at 1,986.

Commodities

The Dollar Index was higher at 83.77 on a lower Euro, and the Aussie Dollar closed down at 0.973.  Commodities prices traded higher.

Overnight the COMEX WTI Crude for MAY13 delivery closed up 0.9% at $US96, the COMEX Copper for May 13 delivery closed up 0.9% at 3.323, the COMEX Gold for JUN13 delivery closed down -1.9% at $US1,359.

ASX News Today

BHP – BHP Billiton, new chief executive Andrew Mackenzie has outlined plans to slash capital spending by almost 20%.

CBA – CommBank has lifted its third quarter profit by 12 percent to $1.9 billion.

GNC – Graincorp Australia’s largest grains handler has reported one-third profit drop as regulators consider a takeover bid from an American food giant.

MAH – Macmahon Holdings the mining services provider shares surged, after it detailed positive growth in a “changing and challenging environment”.

SYD – Sydney Airport has forecast larger distributions for its shareholders as its number of passengers continues to rise.

RIO- Rio is facing union troubles as the maritime union has accused the owners of a Newcastle coal terminal of “continued belligerence” amid an ongoing industrial dispute at the facility.

TAH – Tabcorp the gambling firm has begun legal action against the Victorian government over a poker machine levy set to cost the company millions of dollars.

VAH – Etihad has increased its stake in Virgin Australia after Virgin announced a profit warning issued by the airline.

WBC – Westpac Bank has has dropped its one year fixed home loan rate for new customers to 4.79 per cent.

WES – Wefarmers is off target after Target’s profits have been hit by a late start to winter, which means Target’s EBITDA will plunge by 40% for FY2013.

WOR – Worley Parson joined other mine service companies down grading their profit forecasts, citing a slowdown in Western Australia’s mining industry for its profit downgrade.

WPL – Woodside Petroleum is keeping an eye on an offshore gas field in Mozambique that is five times bigger than its North West Shelf project.

WRT – Westfield Retail Trust says consumer confidence is improving but shoppers are still cautious and sales growth is still low.

Market Summary

ASX – to open higher
US & UK/Europe – higher.

US ADRs – Broadly  higher!!…

ANZ +1.1%, NAB 0.1%
BHP +1.0%, RIO +0.6%, NEM -2.5%

By Michael Hevern
D2MX Investment Advisor

For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock markets have been strong again this week, with many making new all-time highs. The US and German markets have been particularly impressive, and Japan is at 4½ year highs. Trader sentiment has been buoyed by speculation that soft economic data will firm the resolve of the central banks’ commitment to continue their stimulus programs.

Closer to home, the Federal Budget was handed down with a $21 billion turnaround, but this did not affect the equities market. Nevertheless it has been a terrible week for mine services companies with a number reporting profit downgrades and subsequently seeing their share prices punished. The mining sector has suffered from the weaker commodity prices, with gold cracking below the $1,400 level and iron ore prices now down over 20% from February highs.

US stock markets are hovering around new all-time highs. Traders have responded positively to soft employment, housing and manufacturing data, as the Fed Chairman Ben Bernanke confirmed that the US Federal Reserve will continue its unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent. However overnight we saw some profit-taking as the Federal Reserve Bank of San Francisco President said the central bank may begin slowing the pace of its $85 billion in monthly bond-buying amid signs the economy is gradually gaining strength.

The Dow Jones has remained above the 15,200 level. The S&P500 again held at the 1650 level near all-time highs and has closed higher for nine of the last eleven trading sessions (up 16% for the year). Nearly 200 of the S&P 500 stocks are at 52-week highs, the most since 1993. The gains have been broad based as over 85 percent of S&P 500 stocks are trading above their 50-day moving average, according to Bloomberg (the highest level since 14 March).

European stock markets are hovering around 5-year highs. The Europe Stoxx 600 is up 10% for the year and is at its highest level since June 2008. It is clear that the ECB will remain supportive of equities going forward. Across the region the commodity related sectors weighed again, after JPMorgan lowered its forecast for Chinese 2013 gross domestic product growth to 7.6 percent from 7.8 percent, citing weak domestic demand. Traders also received confirmation that the eurozone is suffering its longest recession since the GFC, as a Eurostat report showed the eurozone economy shrank more than economists had forecast, extending its recession to a record sixth quarter as GDP fell 0.2 percent in the first quarter, after sliding 0.6 percent in the final quarter of 2012. The longest recession since 2000 is the 15-month long contraction in 2008-2009.

The German market held a new all-time high and is up 10% for the year. In London traders pushed the FTSE to its highest level since December 2007, after the Bank of England said that an economic recovery in the UK is now “in sight”, predicting that growth will accelerate to 0.5 percent in the second quarter from 0.3 percent in the first three months of the year.

Asian stock markets have held on to recent gains, hovering around 5-year highs. The MSCI Asia Pacific Index is up 10% for the year and is on track for the longest winning streak since September 2009, on optimism over central bank stimulus, Japan continuing to deploy more measures to beat deflation and as centrals banks remain supportive in the US and Europe. In Japan the market held above 15,000 at 4½ year highs, on the back of a weaker yen. The pullback was despite Japanese GDP surprising, rising an annualised 3.5 percent in the three months through March, the most in a year (better than the forecast 2.7%), while fourth-quarter growth was revised to 1 percent. The Chinese market saw some bargain hunting, having its best gain in 2 weeks, as the Shanghai Composite is now only down -0.8% for the year, having fallen around -9% from its February peak. Of the around 420 companies on the MSCI Asia Pacific Index that reported their latest quarterly results since April, 53 percent have beaten analyst forecasts, according to Bloomberg.

In today’s Analyst’s Eye we discuss what happens if you get caught on the wrong side of a gap trade in Mind the Gap.

The month of May has ended lower in the past three straight years, but according to a study done by Goldman Sachs the market has never been down for four consecutive months of May in the past 80 years and the bulls are succeeding in providing support this month so far.

The Aussie market is still hovering around 5-year highs, even as the materials sector gave back half the prior week’s gains, on the back of weak commodity prices. The finance sector has held on to gains as the chase for yield has pushed that sector 10% higher in the past six weeks and the telecom and property sectors have enjoyed a similar outperformance.

The market has held around the 5200 level and this level will be key for next week. Once again the All Ords is testing the key 5160 level. The ASX200 market is flat for the week having bounced off the 5150 level. The main drivers have been banks going Ex-dividend and the weak commodity prices which have hurt the materials sector, downgrades from the mining services sector, and the Federal Budget.

Key levels for the ASX200 index next week will again be 5100 and 5250, with 5160 the key near term pivot level. Volatility remains relatively subdued, affording cheap protection for your portfolio. We are holding above the 13-day moving average and this level will be key for the trading in May.

Protection is still relatively cheap and investors can have cheap insurance for their portfolio and could look to put their money to work, while reducing their risk by using options and warrants strategies. Remain attuned to the news from overseas, particularly from the eurozone (corporate earnings), China (stimulus) and the US (corporate earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.