What Worked Australia - 15 Apr 2016 - Massive Momentum Reversal back into Value

What Worked – A stellar week for the Australian stock Market this week generating a +4.4% return in the benchmark index. This saw a huge reversal in Momentum, in particular the 1 Month Momentum, a signal that has been reverting for last month. Names that have been underperforming particularly heavily over the last month saw a big bounce back yet again this week, including Nine Entertainment (NEC, +5.4%), Seven Group Holdings (SVW, +10.4%) and Beach Energy (BPT, +12.1%) leading the charge in the larger end of the index, while names like ALS Ltd (ALQ, +15.8%), Fortescue Metals (FMG, +14.8%) and BHP Billiton (BHP, +19.4%) all managed to completely erase their losses for the last month over this week. The big difference between this week and the last month is that 12 month momentum final ended its winning streak this week and saw a reversal that also benefitted Value names.

Value saw a bounce this week also, however this was in large part due to the swing in momentum, rather than an active buy into value names. There was a sell-off in the more expensive end of the market, while the cheaper names did not see any real gains this week.

Who Moved – For all of this performance only 7 names managed to post higher than normal volumes this week. In the winner’s circle, Bank Of Queensland (BOQ, +2.8%), Tassal Group (TGR, +0.8%) and Iluka Resources (ILU, +0.5%) all posted positive returns, although none managed to beat the index, while Cromwell Property (CMW, -5.1%), Investa Office (IOF, -0.6%) and Platinum Asset Management (PTM, -0.3%) all fell well short on heavier than normal volumes.


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