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The roller coaster ride continued this week, ending on Friday with the wheels falling off! Not everything moved lower, but there were some big falls on some popular trading stocks (PLS down 19%, GXY 16%, ORE 15%, LYC 14%, BPT 12% with the energy sector taking a general hit).

The XAO fell 2.9% to close below the narrow price channel it has traded in over the last 10 weeks. This week’s candle is a bearish engulfing candle which could mean more falls next week. The XAO chart suggests price could drift lower over several weeks to the 6750 to 6800 range – a fall of 5% from last Monday’s high. The is no apparent support between Friday’s close (6871) and 6750.

I don’t see the sky falling in just yet, but it is a time to be conservative and watch one’s stop losses.

My own portfolio also suffered with BID, BPT, LYC and WTC also sold for small losses to protect capital as the stock's outlook was negative.

I purchased LTR, NEA and BSX earlier in the week but none of these moved up against the overall downward pressure of the general market. In fact, my entire portfolio, with the exception of SIQ, fell with the largest loser being CHN (-16%). BPT, OSH, MYX and MVP were all down between 8% and 10%. The overall decline in my portfolio this week was 4.9%.

Continuing the negative theme, most of the listings on my Stocks to Watch page last week have been removed, having experienced strong falls. That’s not to say they won’t turn around next week, but right now, with the market potentially soft, their immediate outlook is unsure. Several highly traded stocks have fallen back to the lower boundary of their price channels and (assuming the price channels are valid) they now have a good chance of moving up. However, they are all high risk and need to evidence a change of trend over the next few weeks, and to buy now could be a case of ‘catching a falling knife’. EMV, NCM, PNV and SLR all fall into this category. TRS I mentioned a few weeks ago because it looked as if it was breaking up out of a pennant pattern. That pattern failed and price fell back but it now looks like the pattern may have been a flag (rectangular) or possibly even a Wyckoff pattern and price may move up strongly.

Monthly update of New Years Stock Picks

On 1 January I picked 11 stocks I saw as having potential to rise this year. One month on the results are a mixed bag with roughly equal numbers of rises and falls. The overall result has been a fall of about 0.8%. WPL was the largest riser (up 7.6%) while BPT was the biggest loser (down 8.9%). You can find the picks listed on my Stocks to Watch page or click HERE

Contact

Robert Norman

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

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