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Despite the market sprinting higher in the prior week, the XAO still managed to put on just shy of 2% this week and at 6,740 is only 56 points from 6,796 – a number I’ve been suggesting for several weeks as a likely target. It may reach 7,200 towards the end of this year but as always, the market may have other ideas and it does not pay to look too far ahead.

My own portfolio only saw a 0.3% rise. The principal gainers were MSB (12%), M7T (8.0%), BPT (8.0%) and EOS (7.9%). There was only one major loser in MVP (down 6.1%).

Two weeks ago I started a theoretical portfolio (paper trading) of 10 large cap stocks for potential long-term trades for my students so they can get a feel for how I deal with these stocks over the coming weeks and months as price unfolds. That portfolio is up 2.5% so it is off to a good start, albeit with a much more sedate group of stocks than I usually trade.

This week I topped up holdings in BPT and SGM and entered a new trade in CHN. I also sold SGM at its predicted target.

My Stocks to Watch page has had WGN returned after a couple of weeks absence. It also sees AWC, CHN and TRS being added. The stocks on that list last week rose approximately 2.5% on average – ABC fell by 5% but CBA, EOS and WOR were all up by 8% - 9%.

All the banks have similar looking charts and at the moment they are all looking like they are going higher. I haven’t commented on them all but you can find WBC and CBA on my Stocks to Watch page.

Gold mining shares have always been popular with investors but I rarely trade them as they are often quite volatile and their charts can be challenging to interpret. It is best to trade gold stocks when the price of physical gold is on the rise (so the rising price of gold supports rather than restrains potential rises in share prices. The chart below shows that Gold made a technical downtrend from March to June this year and since that time it has not moved into a technical uptrend – so by definition it remains in a downtrend. Gold has not made a higher low followed by a higher peak on the weekly chart since late July and is now down 10% from its most recent high in August. While gold mining/exploration shares travel to their own rhythm, they are influenced by the price of physical gold, and now might not be the best time to buy them. I had second thoughts about buying CHN this week, but the strength of its chart eventually won out – although my trade was a little less than my usual buy in.

Gold 20Dec20


Robert Norman

Phone: 0428 346 951

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