Westpac shares (ASX WBC) are currently trading at the bottom of its consolidation at around $30 p/s and the ASX200 is starting to find some support at this 8520 level. Expect yield hunters to support WBC stock with WBC shares yielding around 8%.
ASX200 Finding Some Support But Still Risk To The Downside
On a technical basis, the ASX200 value area high (consolidation high) during June to October was around the 5800 area. The ASX200 looks to have found some support at this level. At this point, the market will likely consolidate sideways until we get a bit more news flow out of the US markets on where they may be headed next.
However, the risk is still to the downside. The US had a small rally yesterday but this was off the back of 30% less volume than the previous day and the previous week. NYSE volume yesterday was 4.02b, versus 5.6b the previous day and down from 5.2b a week ago. NASDAQ volumes were down at 2.022b, versus 3.13b the previous day and down from 3.05b a week ago.
This indicates lack of institutional participation and conviction. We can expect institutions to stay cautious towards the market for at least a couple more weeks.
Westpac Shares Finding Support At $30 p/s Level
ASX WBC shares traded down to a previous low made in June 2017 where the stock found support and rallied back up to above $33 p/s. At this level, WBC stock dividend yield is above 8%, having paid over 12% last year.
[wd_hustle id=subscribe-now type=embedded]
With such high yields, we can expect yield hunters to come in and start to support the stock at this level unless there is an expectation for the banks to cut their dividends. However, without a catalyst such as rising default rates in real estate mortgages, it is unlikely WBC shares will continue to see sustained selling pressure.
On a fundamental basis, WBC shares are solid, the main theme at the moment would be how the overall market and the higher volatility will affect the underlying shares and whether they will create opportunities such as this.
More MF & Co. Research
Henry is a co-founder of MF & Co. Asset Management with over 12 years experience as a trader, investor and asset manager. Henry’s focus is on High Net Worth Wealth Management and using algorithmic quantitative trading systems to invest for his clients. Henry also trains new Interns and Advisers on trading and risk management.