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The XAO has continued its slow creep higher moving up 0.45% for the week. Over the past 5 weeks the highest weekly price of the XAO has only increased 0.4% as price creeps along the top of the green price channel in the chart below. Price patterns suggest a top of 7680 which might see the current sideways creep continue (until mid-July?) after which a correction of some degree could be expected. However, timing can be very ‘rubbery’ in charting and that ‘flame out’ by the market could be sooner or later.

XAO 12June21

Last week I commented that falling gold prices had adversely impacted my trades, however yesterday’s trading saw a material recovery of those prior losses.

I have previously mentioned a hypothetical long-term trade portfolio I put together as an educational tool to explain real time trading. Set up in November that portfolio has outperformed the market and my own personal trades with an annualised yield of more than 35%. This success is partly down to luck, but more so to selecting large profitable companies exhibiting a history of  long-term, consistent growth. With prices near or at all-time highs, pattern trading becomes less reliable while good stable large-cap shares just keep on keeping on.

I bit the bullet this week and sold 50% of my portfolio, clearing out all speculative trades as well as those that just didn’t seem to be moving up as strongly as hoped. Normally, my trading plan is to hold a stock until it makes a perceived target or breaks below a stop loss, and to go against my trading plans wasn’t an easy decision. My portfolio now comprises mainly stocks of a similar risk profile to my hypothetical trade. Having ‘cleared the decks. I topped up SGM and entered 2 new trade (BXB and ECX) – because their profile and outlook was more in keeping with my new trading plan..

As last week’s Stocks to Watch all still show potential to rise further, no changes have been made. TMT (rose 16.7%) , EMV (+9.1%)VUL (+8.1%) and PLS (+7.2%) were the standout performers


Robert Norman

Phone: 0428 346 951

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