David Jones (DJS)
DJS has had a strong year so far rising 20.76%, although it seems to have found somewhat of a fair value range. The stock has traded in a narrow range of $2.80 to $2.93 in September and seems to be lacking a catalyst. Perhaps that will come today with the retailor reporting full-year earnings. The market expects a slight decline in NPAT to $98 million (down 3% on the year), while announcing a 6.5 cent dividend. Expectations are for costs to rise, however this should be offset by a nice spike in gross margins.
Many have had to swallow their pride and admit they have been wrong on this stock, with the social media giant hitting a new all-time high of $49.66. Is the stock expensive? According to Citigroup (who upgraded it to a buy rating), it sees the company as a $55 stock on its future earnings forecasts. FB did pull back throughout trade and this could be telling as some indecision has been seen on the daily chart; while we’d never look to short a stock in such a strong uptrend, we are starting to see signs of divergence on the RSIs. Since June the company has rallied nearly 120%, however given the trend we favour buying pullbacks here.
The JPY was the sought after currency overnight, having rallied strongly against the NZD and NOK. AUD/JPY has pulled back in recent days from a high of 94.44 to sit at 92.75 (at the time writing) and has retraced over 23.6% of the recent rally from 86.46 to 94.44. Given momentum indicators are still very strong we feel pullbacks could be contained, with key support coming in at the 38.2% retracement of the mentioned move ahead of the September 13 low of 91.39. We are watching the AUD very closely at present for signs that the currency might start attracting heavier selling in the coming weeks.
In US trade we get the August read on durable goods and the market expects a 0.2% fall on the month after August’s shocking 7.3% fall. We also get new homes sales figures (expected to increase 420,000), while New York Fed President Bill Dudley delivers yet another speech. Key support comes in between 1687 and 1690 and a break here could signal that traders are prepared to increase bearish strategies.
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