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The XAO jumped 2.2% this week and having closed at its highs (and a new all-time high by a bee’s whisker) in the absence of negative news (such as Covid out of control in Victoria), I’d expect it to go higher next week. For several months I’ve expected a top in the region of 7500 and if price doesn’t fall back at the start of next week, chart patterns suggest a target of 7682 for the XAO. However, price is at the top of its range for the current price cycle and growing pressure for a correction might see a shortfall in that target. 

While the gains this week were spread across the market sectors, consumer discretionary, IT and financials were the stand-out sectors to be in, with rises of around 3%.

My student long-term trading portfolio increased by 2.5%, slightly better than the general market. My own, more speculative portfolio was up 0.8%, held back by low exposure to the sectors that performed best and not aided by FPH which reported an 82% profit increase and fell by 12% for the week. Apparently, investors were unimpressed because the company failed to provide guidance for the coming year’s performance. I’ve held this trade as it is a strong company with a great track record that should recover those losses. I’d like to think it can claw its way back to $30 over the next 3 or 4 weeks, perhaps retesting say $28 before resuming its climb. Falls like this are usually followed by what is called an automatic reaction or bounce (although price fell a little more on Friday).

My best performers for the week were CKF (up 9.5%) and WGN (up 8.7%) and the only large fall was FPH as noted above. I sold CKF for an overall gain of 15% as it had reached my target. I also bought back into CUV, SLR, SGM

My Stocks to Watch from last week all moved up except for EOS which fell 2.5% and ABC which was unchanged. Both retain potential to rise and have been left as Stocks to Watch. I’ve added VUL and ECX as both show short-term potential (possibly long-term in the case of ECX).


Robert Norman

Phone: 0428 346 951

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