Weekly Blog 6 November 2020

Another topsy-turvy week driven by concerns over the US election and Covid. The seemingly inevitible Biden win lit a fire under prices at the end of the week to see the XAO close 4.3% up for the week. We’ll need to watch this coming week to see if price can close above 6,500 or whether the price channel top boundary (click here for XAO chart) will again prove impenetrable as it has 3 times already. A break up out of the channel would see a target of 6,800 and potentially 7,200. 

Unusually, all my holdings rose for the week with the best performers being VOC (15%), SVY (14%), PAR (11%), FBU (8%) – the latter 2 being trades identified this week.

This week saw purchases of – GEMFBU, SGM and PAR which are all new trades, plus a top-up purchase of more SVY. Analysis can be found by clicking on the stocks code here or going to my Stocks to Watch page. The week ending 30 October saw a number of stocks removed from the Stocks to Watch page because the fall in market prices had made their outlook less certain. That said, some of those stocks remain of interest and may be relisted in time.

Weekly Blog 30 October 2020

The impending US election and global concerns re Covid 19 saw the XAO fall by 3.7% this week to close at 6,133. With the US market falling again on Friday night and our futures negative at the time of writing, a fall to 6,000 looks quite possible next week. Whether that will be the end of the rout probably depends on how investors perceive the outcome of the US election. A fall to 6,000 would see price falling to the lower boundary of the price channel in the chart. If that support turns price up again (I expect it will), then I’d expect strong price rises back to the top of the channel (and hopefully a break higher). The alternative is that the US doesn’t have a clear result (or the result isn’t accepted) and things get messy. Combined with Covid out of control in many countries there could be a global market downturn. Any of the retracement percentages shown are possible but a fall of 11% from our recent high to 5,720 would be my first choice, followed by the 50% retracement of 5,450.

XAO 30 Oct2020

My portfolio followed the market last week and was down about 4%. I closed out some of my trades to protect profits and minimise losses in light of what looks to be a difficult week or two ahead. CSR was sold after it fell back 3.6% and made a bearish engulfing pattern suggesting lower prices next week.

My best performers this week were – 4DS and CCL (both of which spiked and were sold) along with PLS and SGM which were both up 5%.

The laggards were: LOV (-13%), BID (-7%), EOS (-8.3%), VOC (-8.5%) and MQG (-6.9%). LOV and BID are only small positions which have still not quite broken their stop losses.

During the week I also added to my holdings of FPH and WTC.

Many of the stocks on my Stocks to Watch page last week have been removed because their price fell during the week and the patterns they were building are less certain for now. A scan of the ASX showed no new potential trades worthy of comment.

Weekly Blog 23 October 2020

The XAO was down 0.16% this week – not having gone anywhere it remains at the top boundary of the price channel referred to last week with no indication if it will break higher or fall back. The weekly candle was a doji suggesting market indecision (and a potential reversal next week). The previous analysis stands – the possibility of price falling back to 6,000 or breaking higher to 6,800.

My portfolio was up about 2% for the week, helped by two short-term trades – a 12.7% profit on PPS and 16.5% on PPK. PPK was a new listing on my Stocks to Watch page last week where I bought in on 19th, added to that on the 21st, and sold on the 22nd. If they were only all so easy! 

During the week I purchased COH and SVY.

Best performers for the week (other than PPS and PPK) were PME (+12%), PLS (+6.7%) and COH (+5.5%). The worst laggards were M7T (-10.5%), BID (-11.0%) and MVP (-5.2%).

Four stocks have been removed from my Stocks to Watch page, either because they have reached target or are now too close to the target to support an entry. Four new stocks have also been added and TRS (with a potential rise of more than 60%) is probably my pick of the litter.

Weekly Blog 16 October 2020

Another up week for the XAO (1.5%). As the chart shows price has risen to the upper boundary of a price channel which has seen the XAO range-bound since June. My preferred view is that price will break up out of that channel next week to move up towards 6,800. The alternative view is that the XAO will fall back from its current level to around 6,000 before moving up again. While this probably sounds like having a bet both ways (ie “price could go up but it could go down”), until prices move decisively one way or the other all we can do is hope for 6,800 while being ready for a pull-back, if it happens.

My portfolio rose just under 2% for the week – a little better than the overall market. I decided to sell 50% of my small holding in MSB as I could see it going lower (it ultimately lost 7.7% for the week so perhaps I should have sold the lot!). BXB rallied slightly from my stop loss but it was sold this week for a small loss (.06%) as it hadn’t performed as I had hoped and remains in a downtrend. I also quit a small long-term holding in AVH that I had been watching since I got caught when AVH’s price collapsed in March. Price had rallied a bit since the start of August, but this week saw a fall of 6.6% eroding most of those gains. While I think its price will recover, that could be a long process and (like BXB) I believe my capital could be better utilised elsewhere.

My best performers for the week were MQG (up 3.5%), PME (9.0%), ALU (3.9%), MYX (3.1%). Worst performers were LOV (-4.5%), MSB (-7.7%).

Two stocks I’ve mentioned in the last couple of weeks have continued to rise – DSE (up 44% for the week) and BAP (8.7%).

I identified 12 new stocks for potential inclusion in my Stocks to Watch page this week but decided to limit that to six that seem to have the strongest outlook. Two stocks (DSE and PTB) were removed from the list.

Thought for the week:

Many investors have poured into BNPL stocks in recent times. ASIC is about to rule on whether BNPL lending should be subject to responsible lending guidelines (something separately being considered for watering down by the federal government). My guess is ASIC will require BNPL lenders to adopt similar procedures as required by current consumer lending legislation. If that comes to fruition the BNPL business model will suffer a significant hit.

XAO 16Oct2020

Weekly Blog 9 October 2020

What a difference a week makes! Last week it was looking like the XAO was rolling over to go lower only for this week to rise 5.5% - being the strongest sustained rise since April with (importantly) a close at the highest level since the March low. Will it go higher? With volatility caused by market uncertainty due to the economic hit of the virus and the upcoming US election it is impossible to say and we’ll need to wait for next week to see what unfolds. A break higher would be a very positive sign but (despite the popping of champagne corks in the background) be aware that prices often make a major push down before rising strongly or (as could be the case here) a major push up before crashing down.

Last week I mentioned closing out IGO on a broken stop loss and of course the stock’s price has since risen sharply. However, but it could just have easily gone the other way – and may do so if last week’s euphoria disappears. My portfolio performance for the week was 7.0% - a little better than the overall market. This result was gratifying given it includes a 14.5% fall by MYX after a failed/delayed application to the FDA. Speaking of the FDA, MSB has recovered 5.6% for the week but I’m having second thoughts about holding onto this stock in the hope of better times because it looks like any recovery could be long term and, if so, my funds could be better utilised elsewhere - but I’ll wait and watch for a little longer.

Last week I mentioned WGN and DSE as a couple of stocks that had made promising patterns and included them on my Stocks to Watch page. I bought and sold KGN this week for a 12.5% gain but should have held on for my target as it made 28% for the week. I passed over DSE but it also rose by 21% before falling back to close 12% up for the week.

My best performers were PLS (17%), EOS (14%), BID (10%), PPS (10%), LOV (13%) and MQG (9%). The latter two were purchases this week after strong patterns being identified. Apart from MYX all trades rose except TCL (-0.9%).

See my Stocks to Watch for potential tradeable patterns identified this week. With the surge in prices many stocks have commenced building tradeable patterns, most of which will probably come to nothing. Consider the stocks mentioned only as “potential” trades. If you don’t have reasonable charting skills (or have not read my educational material) and cannot do your own analysis (and especially set stop losses), then you shouldn’t trade them.

If you read Stocks to Watch last week you would have seen BAP and ECX were listed as potential trades. This proved to be a good call as BAP rose by 10.8% this week and ECX 8.4%. Both are approaching their suggested targets and while there is nothing to say they will stop at said targets, a short term trade would now be high risk.

Weekly Blog 2 October 2020

This week the XAO lost 2.6% to make its lowest weekly close since June, erasing all gains for the past 3 months. Price has fallen to the lower boundary of a possible price channel (see last week’s blog for chart) and it isn’t impossible that the boundary will support price into higher prices next week. That said, the market hasn’t had such a negative feel about it for six months and I wouldn’t be surprised to see 5830 tested next week. Trump testing positive to Covid19 has startled the US market – which was reflected in the ASX falling off a cliff late on Friday.  It is possible the market may decide Friday’s selling spree was an over-reaction and Monday will see those losses pared back.

The weak market has caused several stop losses on the brink and I’ll need to consider closing these trades out next week if the falls persist. BXB has breached its stop loss by a bee’s whisker, making a bearish engulfing candle for the week. Looking back over the chart history there seems to be some evidence that BXB often recovers in the week following this type of candle – so I’ll give it a little more time.

I have to admit to buying a small parcel of MSB because having broken above resistance with a potential target of $6.44 and making higher troughs and peaks it was a technical buy. Charting aside this was a high risk trade as I was aware a decision was pending from the FDA on an approval for MSB’s drug treatment. I expected the price to rocket on an approval but otherwise tank. The FDA ultimately asked for further evidence of efficacy, causing the price to initially fall by 45% and close 37% down. I’ll hold because (a) the damage has been done and (b) price often recovers after these strong falls as bargain hunters move in.

I also bought BID this week and while it initially rose, price has moved back with the general market sentiment.

IGO was sold after breaking its stop loss resulting in a 11% loss on a small initial buy in.

There aren’t many winners in a market such as this week’s, but several of my trades ended in positive territory – CSR, VOC, MYX, PPS. Of course there were losses as well with TCL down 6% and CSL and BXB losing 4%. The balance of my portfolio saw a fall of about 1% for the week – which was better than the market.

At the end of the week I usually look around for stocks that might be making tradeable patterns. Needless to say pickings are a little slim this week but for those with an appetite for higher risk trades, WGN and DSE came across my radar. I have briefly commented on these two in my Stocks to Watch page.

Weekly Blog 25 September 2020

The XAO closed up 1.4% for the week, making it two positive weeks in a row – as compared with the US having 4 sequential weeks lower. Price is still trading within the range of a rising flag pattern and last weeks candlestick pattern suggests a rise next week. On the daily chart Friday closed 0.3 points higher than the previous peak on 16 September. Technically, a higher peak but given the margin I wouldn’t necessarily read the promise of higher prices into this. As I write futures are in the green and the US had a positive Friday their time.

The push up was in part driven by the finance sector on news the government plans to ‘abandon’ responsible lending guidelines. I suspect this is a media sensationalism (or a poor choice of terminology by the government - again). From what I’ve seen it only means that lenders will be able to rely on borrower’s claims as to their disposable income. Assuming the eventual legislation reflects that I expect business much as usual by the Banks and the windfall some investors might be expecting will evaporate and share value will be challenged – especially when bad debt write offs from the virus driven recession start to show up and eat into provisions.

On the negative side, this week has seen a lower trough on the weekly chart – usually considered a sell signal.

XAO 26Sept2020

I’m still moderately comfortable that price will move up and possibly break up out of the flag pattern (It would need some confidence to come into the market to see this). The alternative is price might rise but fall back before making a higher peak and then fall down out of the flag with a lower trough. This would be a major negative and suggest new lows of 5830 or 5400 are likely. It remains a time to watch your investments closely and have good tight stop losses – just in case.

This week I sold SXY for a gain of 9% and SPK for a small loss (2%). I bought SPK in 3 tranches in line with my trading plan (Got one? You’re gambling if you don’t). Made a profit on the first tranche, broke even on the second and lost on the third. This trade started in April and didn’t move up as expected (hence a long hold for me) and has been in a very slow decline since the start of August. I suspect it will probably recover and head up towards $5.00 from its Friday close of $4.33 (especially given I’ve sold – it’s Murphys Law). However, at the time I sold there was a good probability of lower prices and my stop loss was broken in an uncertain market. I have a couple of other trades underwater but hanging on above stop losses that I’m watching closely.

I also topped up my holdings in TCL and CSR this week as both are performing well. A share I traded a couple of weeks ago and sold at target (TSO) fell back 17% from its subsequent high, rose 16% and Friday closed up 10% from where I sold. The extreme volatility has kept me out of the stock.

Stocks with a bullet on my watch list this week are PTB, PPH, COH, WOR – but as noted above this is an environment to be cautious of and a time to ideally stick to larger cap shares. See Stocks to Watch on my Stock Commentary page for a summary.

For the week 10 of my holdings rose and 6 fell and while I don’t track a weighted average it was about a break even result dragged down by two small holdings in PLS (down 17%) and AVH (12%). AVH is recovering and broken above a downtrend. PLS will break my stop loss unless it closes higher this week. The sharp loss might be due to concerns over Lithium prices with Tesla entering the industry to push battery costs down. Best performers for me were TCL (up 8.4%), PME (5.5%), CSR, CCL (4% - 5%).

Weekly Blog 18 September 2020

The XAO showed a 0.3% gain this week, or put another way it hasn’t gone anywhere. It did rally a little earlier in the week before drifting back. On the positive side it is still making higher lows and higher highs, however, a fall below 5992 would break that run and see the potential for price to fall to 5830 and if that doesn’t hold - 5400. I’m still leaning towards prices recovering and going higher but I’m less optimistic than I was last week. The US market is nervous with the forthcoming US election and tech stocks have fallen out of favour.

I’ve been through my portfolio several times this week to identify stock showing signs of weakness, not performing as I had hoped and reviewing my stop losses. It will be necessary to jettison a few of these if the gathering storm clouds do more than just threaten. Again, it is not a time to buy unless some irresistible opportunity arises.

I did come across one ‘too hard to pass up’ pattern on a small gold miner (TSO). It suggested a rise from $0.24 to $0.30 when I became aware of it on Wednesday. I bought on Thursday and sold on Friday for a quick 15% gain. I probably sold prematurely on Friday when price stalled and the market in general was sliding. Ultimately, it rose 32% yesterday to close near my target. With the weekend coming I felt a ‘bird in the hand’ approach was appropriate.

I also bought PPS (which I mentioned in a recent blog). I also bought more CSR which has moved up and shows what I believe to be a potential to go higher.

I reluctantly sold SPK as it just hadn’t performed as expected and has been falling back with the potential to fall further. I bought SPK in three tranches and made a profit on the first, broke even on the second and lost on the third. Overall, it was a very small loss on the trade. I feel it may very well recover, but the charts don’t agree.

In general, my portfolio did OK this week with the standout performers being PLS (up 16.2%), CSR (7.4%), MYX (6%), AVH (9%) – and of course TSO mentioned above. The biggest loser was VOC (down 5%) but still in positive territory from prior gains.

Of interest, the big building stocks – ABC, BLD, BKM and CSR (the only one I hold) are all moving up strongly.

As noted, this isn’t really a time to buy but I’m watching COH, NUH, ORI, PPS, RED, SAR and SGM for opportunities.


Robert Norman

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

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