What Worked Australia - 17 Mar 2017 - 12M Momentum continues its see-saw

What Worked

12 Month momentum bounced back this week, continuing its near 2 month run of on-then-off again. The big difference this week – the better performing names managed to beat the benchmark, and value ran right along with it. Higher performing names that shone this week included Fortescue Metals (FMG, +11.8%), Resolute Mining (RSG, +17.1%) and Galaxy Resources (GXY, +10.0%). The other side of that trade however did not fare so well. Bellamy’s Australia (BAL, -3.5%), iSentia Group (ISD, -3.9%) and Estia Health (EHE, -3.5%) top out the list of the worst performers over the last 12 months, and this week just saw them digging that hole a little deeper.

Forward PER has over the last two weeks taken a battering, and on a quintile return basis the least expensive names had dropped -4.2% against the benchmark index. This week saw a big correction in this signal, with the cheapest names on a Forward PER coming back producing just over +3.1% of outperformance this week. This was largely the driver behind the terrible numbers in the short term momentum and technical signals, all showing a sharp reversal. Cheap names that bounced back this week included Seven West Media (SWM, +0.7%), St. Barbara (SBM, +15.4%) and Nine Entertainment (NEC, +3.3%).

Who Moved

Volumes continue to look better, with 27 names this week moving on higher than normal volumes. To the downside, Ramsay Health (RHC, -6.0%), Myer Holdings (MYR, -5.3%) and SKY Network Television (SKT, -5.0%) all off backed by significantly higher than normal volumes, while Evolution Mining (EVN, +12.6%), Mineral Resources (MIN, +5.6%) and Fairfax Media (FXJ, +5.2%) all finished the week higher on string volume.

Summary

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