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This week’s high for the XAO was 7358 and anyone who has some of my recent charts of the XAO will see I had expected a high around 7362 – so chalk one up for charting. This week’s candle was a doji which suggests market indecision and as such is a reversal candle – it suggests prices could fall back next week.

We are now officially (in my book anyway) at a market top which is a time to be very conservative and not back any losing trades because ‘they will probably recover’ –they just might not. Price could possibly go a little higher next week because it is still below the price channel upper boundary, but several things can happen from here. In very general terms I’m expecting price to fall back to around 7200 and then push up towards 7500. If there is a pullback it could, however, fall to around 6725 which, at 8% off this week’s high, is close to a technical correction. A fall to around 6200 (16%) is also on the cards if the market panics (which is usually what happens sooner or later at market tops).

Despite the market fall, my hypothetical long-term portfolio I have been running since last November inched a little higher (up 0.3%) and my own personal trades were up 1.0%. There were no standout trades except for RWC which rose 8.1% for the week and DEG which I bought on Thursday and sold Friday. DEG rose 20% on Friday but I missed a slice of that as I sold well before the peak because I had other matters to attend to that prevented me from watching the market Friday afternoon and it was a stock I didn’t want to hold while I’m off grid next week. My only other trade for the week was to sell 50% of my OSH holding as it seems to just keep losing ground and had triggered a minor stop loss.

PLS and MYX have both been deleted from my Stocks to Watch this week after both fell 12%. The steep fall has put a hole in their probability of short term rises but both stocks have fallen back to trend, not below it and both show tentative signs of moving up from that support.

Contact

Robert Norman

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

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