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While the XAO closed slightly higher (.7%) than the prior week, its high was lower than that previous week. While this could be seen as a sign of a general slowing ahead of a move back down to around 6,500 before another rally, as this week closed near its high, prices are more likely to resume moving higher week.

While I regard investing in IPO’s as akin to a night at the Crown Casino, a new listing by Nuix this week skyrocketed making its backers, Macquarie, a billion dollar profit. Investors buying on market have paid an amazing $9 for every $1 of the company’s earnings. Personally, I’d rather hold MQG shares (which I do) rather than punt the unknown. While short-term profits are nice, hard lessons over the years have taught me that the turtle always, always beats the hare in the long term.

My own portfolio this week moved up in line with the market with 70% ending higher and 30% lower. The best performers were BID (up 12.6%), M7T (7.0%) and WGN (17.0%). BID and WGN were both recent picks from my Stocks to Watch page. There were no major declines with COH being the largest, losing 3.3%.

From last week’s Stocks to Watch, apart from WGN there were no standout performers although AWC moved up 5.0% and QAN down by 4.5%. My comments on QAN suggest I see it as a difficult stock to trade and this last week might support that view. This week there are 3 new additions to my Stocks to Watch and three deletions. One of the new listings is A2M which has been a favourite of many that fell on hard times with Covid, losing 35% of its value.

I have been paper trading a portfolio of 10 shares on a long-term basis for my share charting students using the trading techniques I suggest in my material. That portfolio, which targets modest but secure returns with protection of capital paramount, has returned 3.1% since commenced 3 weeks ago.

One stock to watch (for the wrong reasons) is sometimes market darling Z1P. I don’t trade BNPL stocks because I think they have financial and regulatory risk issues but Z1P is interesting to me as a chartist because it has made a text book Head & Shoulder pattern which suggests a strong fall in prices could be ahead. While last weeks new lower low completed that pattern, having done so by only $0.02 is possible prices could recover. However, Z1P is not looking good at this time.

Z1P 4Dec20


Robert Norman

Phone: 0428 346 951

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