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The XAO jumped 1.9% this week, the biggest rise since the end of May. Whether your own portfolio achieved this result will have depended on what you were holding as the big rises (like APT’s 36% rise and PLS’ 18%) were localised. 25 of the ASX top 200 bettered 5% for the week and of those only 6 exceeded 10%. My long-term paper portfolio returned 0.3% and my personal portfolio 0.2% which are probably more representative of most conservative portfolio performances.

The IT sector (not surprisingly) was up a staggering 13.7%. Financials gained 3.1% and gold fell 1.7% (Again - bugger!).

The XAO closed just above 6,800 just 27 points short of my current target for the index – close enough in percentage terms to consider that target as achieved. Having closed at its highs this week, there is every chance the XAO will continue pushing higher next week.

The call for final drinks is getting louder with the XAO having broken up out of a price channel that has held for 13 years and is right at the top of a smaller price channel in force since November last year. Yes, I see the market could still go a little higher, but the likelihood of a correction is now extreme.

XAO 6 Aug 21

My own portfolio showed no trades moving materially. The largest risers were SWM (up 4.1% and bought this week) and SGM (+3.7%). The only noticeable moves down were once again my goldies (NCM, NST and EVN) all of which fell about 2% and restrained my overall gains.

Last week I scanned the ASX top 200 for stocks that had broken above a significant downtrend (a strong technical buy signal). It is interesting to see this week how many of those moved up strongly. On Monday I ‘bought’ one of those stocks, ASX, for my paper long-term portfolio only to see it up 6% by Friday. In my own portfolio I bought BOQ which made a pattern break and was up 3% for the week.

DT breaks July

My Stocks to Watch list of last week mostly rose with ABC, WTC and XRO the outperformers with rises of 8.5%, 7.7% and 6.0% respectively. I have removed TCL (closed below an uptrend), FMG (fallen strongly in line with Fe prices) and DOW (price seems to be rolling over and making lower lows). I could add almost any of the stocks on my trendline break list from last week but have chosen to add only KGN and SWM. KGN is coming off a significant low (most probably a bottom). Price rose 9% this week to reach overhead resistance in the form of a downtrend line. A break and close above $11.35 would signify a break of that downtrend and $12.35 would see a higher high. I’d like to see 2 consecutive weekly closes above that downtrend before considering a buy (and even then that would be an early jump back in with significant risk). SWM has broken up out of a pennant pattern which usually has a high success rate of predicting strong price rises. The potential target the SWM pattern suggests would see a 40% gain on Friday's close.


Robert Norman

Phone: 0428 346 951

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