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A mixed week on the XAO saw price rise strongly at the start of the week only to give back half those gains by Friday’s close – but still up 1.1% for the week. Fridays low was 6,800 - a previous important level and one that may give some support. That said, it wouldn’t be unusual to see lower prices for a week or two after such a strong rally as seen over the past couple of weeks.

My own portfolio experienced a 1.1% fall for the week. The principal gainers were MSB (11.8%) and MVP (10.2%). There were no stand out losers with the biggest fall being PME (-6.8%).

This week I topped up my holding in STO and bought back into WGN which I had traded profitably recently and identified as a stock to watch last week. I also sold 50% of my EOS holdings to protect profit (it looked like price might drift back to an underlying trendline support - where I could buy back).

Banks and financials in general seem to have caught investors imagination with the CBA, for example, being up 17% for the month to date. The last 3 days of this week saw a reversal candle (a doji) followed by two consecutive falls. CBA’s price has been in a rising price channel which (if correctly interpreted) sees price bouncing down off that channels’ upper boundary. Price could now drift back down towards the lower boundary as it did in August/September, or it could retest the upper boundary and even break higher to my original price target of $85.88. My feeling is that price has run so strongly a retracement is the more likely option before a final push higher.

 My Stocks to Watch page has proved problematic this week as so many stocks continue to exhibit strong growth and tradeable patterns, to the extent any uneducated buy would have had a good chance of making a profit over recent weeks. All good things come to an end and when they do the uneducated investors often get burnt because they don’t know when to hold or fold. Anyway, I have tried to pick just a handful of the strongest trades for inclusion in Stocks to Watch. Interestingly they include the Covid impacted stocks of QAN and FLT. CBA and EOS were removed because they have retraced a little and future short-term direction is less certain, however, they remain potential long-term holds. The Stocks to Watch page attempts to only identify short term trades – those with an immediate potential of a lift in price. A portfolio of long-term trades is managed and analysed on a weekly basis for the educational support of sharecharting.com.au students.

Last week I mentioned a gold explorer CHN as having a strong chart and that I had opened a trade. Despite most gold stocks tumbling in line with the fall in price of physical gold, CHN rose 5.2% for the week. This could auger well for CHN when Gold recovers – as it always seems to. However, considering the following paragraph CHN may be swimming upstream.

While I was scanning the ASX this weekend NST’s chart caught my eye. The chart (see below) has a really obvious long-term line of support (the blue line below price) that has been respected like a brick wall for several years. Conclusion - price will probably fall 8% to 10% to again reach that support before turning up. It doesn't have to, but it has a high probability of doing so and suggests to me that gold stocks in general could have a bit more pain ahead and now might not the time to buy.

One final thought on the GOLD chart. Price may be making a price channel (a flag pattern) being the shaded rectangle on the chart. If price does move up from the lower flag boundary and confirm the pattern that could be positive for gold in the long term as prices usually break up out of flag patterns in an uptrend to see materially higher prices. With price at an alltime high I'd also be a bit cautious about that prediction as prices can often form protracted sideways patterns at the top of price action before a major downhill slide. Given GOLD's historical and seemingly never ending uptrend - I'm favouring the higher prices alternative.

Gold 27Nov20

NST 28Nov20

Contact

Robert Norman

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

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