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Investors seem to be rebalancing their portfolios towards a greater exposure to boring old stocks like banks, oil etc which are doing well at the expense of what have been flavour of the month shares like BNPL, techs (even stocks like CSL). So again, whether you made money this week will depend on whether you have a balanced conservative portfolio, or one that is more speculative. That’s not to say all speculative stocks are bad – just less predictable in this volatile market.

My own trading, which is basically reliant on patterns hasn't shown my usual returns for the past couple of months while the XAO has been drifting sideways in a narrow trading range. This is (hopefully) just a passing phase as  I have found that when the going gets tough I need to just wait it out and trust in the charts.

I run a theoretical trading portfolio of 10 stocks which is balanced in that it covers a range of sectors. I did this for people who have bought my educational material and update it each week - so as to give experience in how to professionally manage an investment portfolio and show that you don't have to have very much charting knowledge to do so. The portfolio is based on a weekly chart and stocks are only assessed on the basis of whether to hold or fold each Friday.

While I'm only just better than break even in my own trading since Jan 1, since starting the theoretical portfolio 4 months ago it is up over 9%. Doesn't sound a lot, but it is an annualised return of close to 30%. I'd expect about 12% - 15% per annum so I won't be surprised if a few of those trades fall off their perch. However, it does show the value of a 'steady as you go' approach combined with a conservative portfolio. 

The XAO seems to be rising from the lower boundary of the price channel in the chart below and it would be good if it could go on to make a higher peak on the weekly chart. That could see price go back to the top boundary of the channel (around 7,350) and coincide with a very strong level of resistance from a larger price channel (not shown but range of upper boundary of that channel is shaded in red). I suspect that if this short rally comes to fruition then it could be followed by a correction of around 14% - although sometimes corrections get a life of their own and turn into bear markets.

By the way, the red sloping line follows the daily highs which have shown a strong bearish, consistent decline. The XAO needs to break this pattern as a first sign of the short rally I’ve pencilled in.

Gold moved up 0.45% for the week, although its chart remains very bearish and in a very strong downtrend.

While the XAO eked out a rise of 1% this week my own trading made 2.7% wiping out most of the losses of the past few weeks when my trades fell short of the market.

The only trades to fall were TRS and HM1 – both of which seem well placed to recover. SYD, CUV, WEB, SLR, SFR, OZL, ORA and FLT all rose by more than 6%. Some of these were new purchases while others were top ups this week so not all of the 6% flowed to me. I also topped up MQG and CSL. I sold 50% of my CSL holding a while ago due to their falling fortunes but bought back because they seem to be rising off a support level and a significant low and were up 2% for the week.

Stocks to Watch this week see an inclusion of HAS (bit speculative but an interesting chart) and (not surprisingly) travel stocks SYD, WEB and FLT. SLR also look as if it can make a run as does SGM if it can maintain its recent momentum. BLD has been removed after rising 7% this week and while it has further to rise, it is now too close to my target to represent risk reward value. Many stocks are showing promising moves but the market remains bearish and now is not a time for too many speculative punts.

XAO 12Mar21


Robert Norman

Phone: 0428 346 951

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