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This week the XAO lost 2.6% to make its lowest weekly close since June, erasing all gains for the past 3 months. Price has fallen to the lower boundary of a possible price channel (see last week’s blog for chart) and it isn’t impossible that the boundary will support price into higher prices next week. That said, the market hasn’t had such a negative feel about it for six months and I wouldn’t be surprised to see 5830 tested next week. Trump testing positive to Covid19 has startled the US market – which was reflected in the ASX falling off a cliff late on Friday.  It is possible the market may decide Friday’s selling spree was an over-reaction and Monday will see those losses pared back.

The weak market has caused several stop losses on the brink and I’ll need to consider closing these trades out next week if the falls persist. BXB has breached its stop loss by a bee’s whisker, making a bearish engulfing candle for the week. Looking back over the chart history there seems to be some evidence that BXB often recovers in the week following this type of candle – so I’ll give it a little more time.

I have to admit to buying a small parcel of MSB because having broken above resistance with a potential target of $6.44 and making higher troughs and peaks it was a technical buy. Charting aside this was a high risk trade as I was aware a decision was pending from the FDA on an approval for MSB’s drug treatment. I expected the price to rocket on an approval but otherwise tank. The FDA ultimately asked for further evidence of efficacy, causing the price to initially fall by 45% and close 37% down. I’ll hold because (a) the damage has been done and (b) price often recovers after these strong falls as bargain hunters move in.

I also bought BID this week and while it initially rose, price has moved back with the general market sentiment.

IGO was sold after breaking its stop loss resulting in a 11% loss on a small initial buy in.

There aren’t many winners in a market such as this week’s, but several of my trades ended in positive territory – CSR, VOC, MYX, PPS. Of course there were losses as well with TCL down 6% and CSL and BXB losing 4%. The balance of my portfolio saw a fall of about 1% for the week – which was better than the market.

At the end of the week I usually look around for stocks that might be making tradeable patterns. Needless to say pickings are a little slim this week but for those with an appetite for higher risk trades, WGN and DSE came across my radar. I have briefly commented on these two in my Stocks to Watch page.

Contact

Robert Norman

Phone: 0428 346 951
Email: robert@sharecharting.com.au

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