Follow us on our Journey

Another week that saw big losses on Monday gradually clawed back over the next 3 days, but ending lower after a small pull back on Friday – albeit on lowest volume for the week, given Melbourne’s public holiday for a football match it can’t hold due to Covid.

Last week I said I saw support at 7,483 for the XAO and (remarkably) as the chart shows, price bounced off that level. The next test is whether it can break above the line of overhead resistance at approx. 7,750 for a short rally towards 8,000 and possibly beyond. A break higher could give a target of 8,300 – although I think selling pressures would probably see any immediate rally fall short of that number. Any rally above 7,900 should be considered as being on borrowed time.

The XAO fell 0.7% for the week whereas my own portfolio and my educational balanced long-term portfolio both fell back around 2%. Whether you were in front or behind this week (as always) depended on what sectors you were invested in with materials falling 2.7% and gold down 4.0%, while energy was up 4.9%.

Gold remains a disappointment with the sector seemingly unable to find a bottom after making another new low this week. That lower low in charting terms suggests even more falls ahead, although the current price is also now at a level other charting theories suggest should be a floor.

My Stocks to Watch this week sees VCX deleted as its price has fallen back and the pattern less likely to play out. AIA, WES and REA have been added. AIA rose 3.5% for the week to break out of a sideways pattern that has held it rangebound since the start of this year. It has a potential target of $8.30 but with Covid issues still front and centre, any material push up could see headwinds. WES is coming off a low and is more of a long-term play, whereas REA rose 7.7% this week to close just below resistance at $172. A confident break and close above that level could suggest a target near $198.

Overall, the charts of many stocks are pointing in the wrong direction and don’t provide an encouraging outlook. Today I scanned the entire ASX 300 to see what stocks met the buy criteria I suggest anyone without a lot of trading experience and/or charting knowledge. This is a simple buy when a stock is nearer its lows than its highs and has broken above a technical 12 week downtrend line for 2 consecutive weeks. I only found 13 – and that lack of traditional buy signals should give all traders pause for thought. Many stocks have made trend breaks some time ago and are still climbing, but having risen markedly they are more likely to fall than rise significantly further. Others have broken downtrends recently only to fall back (a fall after a break that sees price go below the last trough before that break above trend is a sell signal). Many others are threatening to break above downtrends, suggesting good buying opportunities may arise once the corrections I see ahead (or happening) has blown over. I don’t intend to analyse in detail those 12 potential trades, but here’s a quick overview:-

BPT seems to meet those requirements after rising 11% last week. I say ‘seems’ because it isn’t possible to draw a technical downtrend along 3 peaks but a line of best fit suggests BPT may have broken above trend for 1 week and should that become 2 close above trend next week, it would be a buy.

CNU has been falling for a few weeks and could be a buy if it moves up (making a break above the short-term downtrend on the daily chart would be a start).

INF A low value stock that seems to tick all the boxes. Making higher troughs and peaks but would feel more comfortable were it to break above $0.16. While I like the chart, I prefer to trade companies with proven profitability/expertise – so will pass.

NXL has rumours of potential misleading listing documents and given that history it is not for me.

OPT has moved sideways for 6 weeks but while meets my buy criteria, it is not yet a profitable operation. Again, like INF, it is not a profitable operation so I will pass.

ORG has had its price savaged over the past year or so and it has made 2 valid downtrend breaks in the past 12 months where buys would have led to losing trades. There is nothing to say the recent break won’t lead to another and I’d want to see an uptrend form and/or prices move above $4.90 to buy in. From a charting perspective it is interesting to see these prior breaks on the chart. As they unfolded, each would have been valid buy signals, but when price subsequently rolled over, a new downtrend unfolded to repeat its trick of sucking in the punters. I do think ORG has promise, however – the problem is when!

ORG 24Sept21

QAN has been a historically a difficult stock to trade and price hasn’t really gone anywhere over the past 12 months. Price is at a very strong past level of resistance.

RBL’s price has fallen heavily over the past 6 months but the recent break meets our criteria. It has made a higher trough and is price moves above $4.50, that higher peak would suggest a buy was possible.

RED is a small gold explorer with a market cap of $480M yet to show a profit. I like the chart but prefer to trade companies with proven profitability/expertise.

SPL has fallen more than 50% this year but it is at a level I consider to be a bottom and has made a strong break higher. If the move up is a change of trend then it is probably on an Elliott Wave 5 which suggests a peak above $2.50 in the longer term. The daily chart shows higher troughs and peaks and I’d give SPL the stamp of approval. However, it is a biotech and like gold explorers they often don’t show profits – so based on my comments about RED I’d probably pass on SPL in this market.

TPG is a $12B company that has been rising slowly (but with volatile moves along the way). My principal concern is that I can’t find a valid Elliott Wave count – meaning that I’m unsure where it is on its current price cycle. While it hasn’t confirmed a valid uptrend line (only 2 troughs and we need 3 in a line) it has confirmed a 12 week uptrend and is making higher troughs and peaks. A buy for me.

So, out of an initial 300 stocks I found 13 possible trades, which in the end distilled down to just 1 buying possibilities – TPG.

Contact

Robert Norman

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

Sorry, this website uses features that your browser doesn’t support. Upgrade to a newer version of Firefox, Chrome, Safari, or Edge and you’ll be all set.