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The market remains directionless with fund managers and traders waiting for a new trend in price direction to emerge.

This week did show the best weekly result (up 1.4%) since the start of February and (importantly) each day’s trade made a higher high price. In the absence of any news likely to send investors running for the bunkers, I still see the XAO as moving back up to 7360 which would be a new all time high. I’ve had that target on my radar for a few months now and I would expect price to then retrace into a correction towards 6450. Put another way – the market is running on empty.

A correction will set the market up for another rally, but it does mean that speculative stocks, with their share price based on expectation rather than actual performance, will take the biggest hit. BNPL stocks could feature in such a shakeout. I have never been a fan of the BNPL players and with increased competition and little likelihood of them turning a profit any time soon I see their valuations extremely challenged. Z1P which had a peak of $14.53 has collapsed to $7.75 and the charts suggest $6.50 could be a bottom.

Gold looks as if it could finally be turning the corner, having made the best sustained move up since the middle of last year. This month has seen consistent higher troughs and peaks on the daily chart and price has risen to an overhead downtrend which may turn price back down again. If price fails to break higher over the next week or so, there remains the potential for a further fall of 6% - 10%. That said, see my analysis on EVN which suggests gold's bottom is in.

My own trading reflected the general market this week and saw a modest increase of 0.5%, again suggesting the market gains are not being shared equally across sectors. A balanced long-term educational portfolio I’m running showed a gain of 1.25% further supporting the view that in this market the tortoise is doing better than the hare.

This week I bought back into EVN, FPH and MYX as well as topping up HLS and TRS. MYX took some money off me in a trade earlier this year but with the stock having made a buy signal I thought I should try and win some of those losses back (a trading plan I don’t recommend as it never seems to work - but in the case of MYX injured pride got the best of me!).

With my Stocks to Watch I’ve added EVN and FPH. Last week’s list included travel stocks WEB and FLT which took a hammering this week because of suggestions international borders will not open as soon as hoped. The charts still suggest they could move up and my gut feel is that with prices coming off significant lows and the vaccine rollout ramping up, they remain well placed to rise. That said, it is expected in charting that sometimes stocks move back down to retest previous lows before finally breaking higher.

Contact

Robert Norman

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

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