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MQG - Earnings changes post guidance downgrade

 

 

We have made the following changes to our earnings. Key changes were:

 

  • Reduction in M&A, brokerage, commission and trading income
  • Reduction in 1H11 revenue on asset realisation gains (from $200m down to $50m)
Our other key assumptions remain unchanged, i.e. no change to staff compensation ratio at 45% and no change in tax rate at 21%.

 

We now forecast EPS growth of FY11 -14%, FY12 +36% and FY13 +13%.

 

GSJBW View: We still see earnings risk to MQG's FY11 guidance and, as such, remain cautious on getting too positive on MQG at this stage, despite our view that conditions should improve in 2H11 and beyond. However, for long-term investors we believe that BV remains an attractive entry point. Post today's earnings changes, MQG's FY11 BV is $33.50 and FY12 BV is $34.50, so MQG is trading on P/BV of 1.05x FY11 and 1.02x FY10 respectively.

 

EPS Revision:

FY10: +0.0% to 317.4c

FY11: -22.6% to 272.7c

FY12: -12.7% to 371.3c

FY13: -12.4% to 421.4c

 

 

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Could amount to nothing, but I really like patterns like MQG has at the moment.

 

This may be the first indication of a basing pattern. Note the short range steps down over the last few days, very neat and possibly controlled, but what has really got my attention is the way the volume is associated with this structure. Rising volume in a down move where the daily range of the bar is not increasing, has to be a market mover at work. (hidden buying soaking up the sellers)

They usually continue to drive price lower until there are no further sellers shaken out of their position.

What I'm looking for next is an extreme low volume down day or a high volume reversal bar which trdes a considerable distance below the open but then closes back above or almost above the open.

What often transpires in subsequent days is an impulsive rise from this candle for a few days, then another slow decline and going into a sideways basing formation.

Next look for a break of support on extreme low volume. If the next day opens with a gap up or equal to the high of the prior day, I'm in.

All this may take a while, might not happen at all, worth watching though.

 

Cheers, M

 

PS,,, sorry for rambling on, I'm bored

post-15078-1287051882_thumb.jpg

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Hi,

 

Entered a long trade on this one today. Pure chart related using VSA principles gives me a target of 3500 to 3510.

This is a very early entry on this pattern, likely not the last unless the pattern turns to crap, and luckily I have already been able to move the initial stop to reduce risk from the initial 2:1 Reward:Risk ratio.

Will look to lock in a risk free trade on Monday if things progress in my favour. Will update trade on Monday.

 

Cheers, M

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  • 2 weeks later...

Am talking to myself here, I know nobody else is remotely interested and I dont care.

 

The first trade ended in bare bones profit on 18th Oct, due more to trade management than good entry, however the second trade of this basing pattern was more favourable.

Entered 2nd trade on 22nd Oct @ 3310 and looking for the 3510/3515 target as mentioned prior post. out at 3512.

Now that we have had the impulsive rise to target, I'm wanting to see the steady decline over a few days (todays high actually broke the pattern by trading slightly above yesterdays high, so not a perfect example). I have a buy target of 3352c, will likely enter the 3rd trade of this pattern at that point as long as it's a small range bar to get us down to the price.

 

In reading VSA price action it's not purely the price I'm looking to buy at, is more a combination of price and importantly the way we arrive to that point as well as the relative volumes traded.

 

If say there is still plenty of supply available, price will fall too easily to the point I'm looking to buy at, and I will be less interested. If however price actually struggles to reach my projected low, I would be more interested to buy at a higher price.

It does not really matter what price you pay, all that matters is what happens to price, AFTER you buy.

Will update as things progress.

 

Cheers, M

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Am talking to myself here, I know nobody else is remotely interested

 

Oh? You know that for a fact do you Mista? :P

 

I took on a presentable parcel during the first dip into 34 (the psych 1:1 PB ratio) a month back when the news of suspected impaired future earnings came out. Set my sights on 37. Never quite got there. I won't be adding to my load as there are several more promising tails to chase and my portfolio is already financials heavy. Low volume sells were certainly featured in the price suppression which sank SP to near 33. Stops triggered along the way I suppose. But I think yours is a more strategic outlook towards volume and price dynamics. As far as I'm concerned though, we have already witnessed a double bottom and my personal outlook is optimistic. There is the Nov 3 overhang though and the slew of negative news spanning US financials.

 

Anyone else on this ride?

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Ben lookin around at the banks lately. Grabbed some WBC and BEN and topped up NAB a little while back. Hoping ANZ will take a breather again as I haven't any. CBA slipping back so getting a lil twitchy ;) I'm mainly looking for income but a nice rise in sp is always welcomed :)

 

I noticed these guys don't have fully franked divi's...

 

cheers v

 

 

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Hi,

 

Pattern is continuing, the step stair down with short range bars did not continue as long as normal, however yesterdays bar gave the signal that supply was exhausted and demand likely to spike price.

I was looking for either an extreme low volume down day or the positive short range day which occured. Either is a good re-entry signal for this pattern.

 

Based on the current volatility, re-entry at close of play yesterday 3455 and a target of 3608 was selected and has already been reached. This means I have been taken out of the 3rd trade today.

I did not expect price to arrive at the target as quickly as happened, this indicates further rise possible for this swing so I'm now forced to look for another entry on Monday morning with new target of 3704. (was away today at Sydney Traders Convention so the sell placed yesterday remained in market till done today otherwise I probably would have been tempted to delete sell order)

 

OK, if you have been watching this unfold, you are aware I said the 3rd entry bid was at 3352 and actually paid more at 3455. My excuse is, as I attempted to explain in a prior post, it's more looking for a sign from the market rather than being fixed at a bid price. This happens regularly and you are better to roll with the punches than get bogged down telling the market where it should turn.

 

I've been trying to give a picture of VSA methods (my version) where you read supply and demand, price and volume, to anticipate price swings as they develop. MQG is so far following a pattern which repeats in many stocks. It is not a fixed frame structure which is as easily picked up using conventional indicators or Fib levels etc, is more easily recognised when the supply/ demand is understood and its ever present affect on price.

 

Cheers, M

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it's more looking for a sign from the market rather than being fixed at a bid price. This happens regularly and you are better to roll with the punches than get bogged down telling the market where it should turn.

 

Hi Mista

Not a truer word was spoken :)

Been trading/scalping this one also recently, but with diff triggers. Missed yesterday's move, don't like to be holding when a rep is due.

I agree there is more st upside to come.

Luck to you.

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Hi mistagear,

 

Do you see this gap up on heavy volume(MQG) on Friday?Will it be filled in the future? It appears that MQG has taken a new course but it is too early to conclude.Only time will tell.

Would like to see gradual accumulation on the chart rather than gaps.

Good luck to LT holders.

 

Sol.

 

 

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Solaris,

 

Without Mondays action, Which I am guessing will actually lower this target I'm about to stick my neck out for, but SO FAR I have a swing low of 3460.

That would happen to coincide with a gap filled, yet is based on a totally different calculation ( calculation in this case means,,, a guess which has a mathematical component as part of the process)

 

Having said that, my method is as stated previously, to not get bogged down with a fixed level at which I'm prepared to re-enter. I use these targets as sort of a roadmap and if price were to reach a level I've nominated within a timeframe consistent with my expectation and also exibits VSA traits supporting my theory.. you can bet I will be buying.

 

You can also assume that if price keeps rising on Monday, I'll be entering a trade with the 3704 target and modifying the plan on the run if required.

I have found it helps my trading to have a couple of plans roughed out prior, then go with whichever one best fits price action.

 

As clear as mud ehh...

 

Cheers

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