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The impending US election and global concerns re Covid 19 saw the XAO fall by 3.7% this week to close at 6,133. With the US market falling again on Friday night and our futures negative at the time of writing, a fall to 6,000 looks quite possible next week. Whether that will be the end of the rout probably depends on how investors perceive the outcome of the US election. A fall to 6,000 would see price falling to the lower boundary of the price channel in the chart. If that support turns price up again (I expect it will), then I’d expect strong price rises back to the top of the channel (and hopefully a break higher). The alternative is that the US doesn’t have a clear result (or the result isn’t accepted) and things get messy. Combined with Covid out of control in many countries there could be a global market downturn. Any of the retracement percentages shown are possible but a fall of 11% from our recent high to 5,720 would be my first choice, followed by the 50% retracement of 5,450.

XAO 30 Oct2020

My portfolio followed the market last week and was down about 4%. I closed out some of my trades to protect profits and minimise losses in light of what looks to be a difficult week or two ahead. CSR was sold after it fell back 3.6% and made a bearish engulfing pattern suggesting lower prices next week.

My best performers this week were – 4DS and CCL (both of which spiked and were sold) along with PLS and SGM which were both up 5%.

The laggards were: LOV (-13%), BID (-7%), EOS (-8.3%), VOC (-8.5%) and MQG (-6.9%). LOV and BID are only small positions which have still not quite broken their stop losses.

During the week I also added to my holdings of FPH and WTC.

Many of the stocks on my Stocks to Watch page last week have been removed because their price fell during the week and the patterns they were building are less certain for now. A scan of the ASX showed no new potential trades worthy of comment.

Contact

Robert Norman

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

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