Weekly Blog 12 February 2021

Very little to report this week. The XAO fell back a little (0.4%) and there is little indication which way price will move next week. As it has generally been alternating between higher and lower prices, the ‘flip of the coin’ probability suggests a better result next week.

My own trading has been frustrating with CIM dropping 20% on a profit release that failed to meet expectations (an overreaction? Time will tell). NEA fell 12% after a short attack which several analysts have refuted today (and hopefully price will recover Monday). LTR rose 11% and VOC I sold after it jumped 18% leaving me up 50% on a 5 month trade). Overall I was down 1.4% for the week.

Given the lack of an obvious market direction there are few stand out trading opportunities that I feel are worth including in my Stocks to Watch (although I reinstated CHN as it again looks to have promise). None of the existing listings have been deleted.

Weekly Blog 5 February 2021

Down one week, up the next. Last week's range of 350 points for the XAO was the largest since April last year. Interestingly, the XAO has had the same high for each of the past 3 weeks and something has to give soon – I’m leaning a bit more towards higher prices than I was last week. The coming week could decide the future short-term direction of the market.

The XAO was up 3.2% for the week which was exactly the same outcome as my own portfolio. A theoretical trading portfolio I am running for purchasers of my educational material also showed a 3.7% gain. This portfolio is designed to show budding chartists how to deal with what I call the ‘hold or fold’ decision when prices start to fall. To show why hard stop losses can be problematic and that those issues can be mitigated by relatively simple charting techniques, there is a video I posted yesterday that might be of general interest. This arose from both BPT and ABC breaking stop losses a week ago to trigger a sale last Monday, but going on to recover with rises of 10% and 12% respectively.

This week I bought NEA and topped up BSX and SIQ. My largest gainer was PAR (+20.4%) followed by BSX (14.6%), NEA (14% although I didn’t hold for all that rise), ABC (11.5%) and SIQ (10.3%). Three stock fell but not by meaningful amounts.

With my Stocks to Watch I deleted DOW because it made a lower low and included BLD, ECX, NEA and VOC.

For the gold followers, the precious metal slipped another 1.9% last week but is at a strong level of support which could see a reversal of its fortunes. That said, it remains in a formal downtrend, making lower peaks and troughs.

Weekly Blog 29 January 2021

The roller coaster ride continued this week, ending on Friday with the wheels falling off! Not everything moved lower, but there were some big falls on some popular trading stocks (PLS down 19%, GXY 16%, ORE 15%, LYC 14%, BPT 12% with the energy sector taking a general hit).

The XAO fell 2.9% to close below the narrow price channel it has traded in over the last 10 weeks. This week’s candle is a bearish engulfing candle which could mean more falls next week. The XAO chart suggests price could drift lower over several weeks to the 6750 to 6800 range – a fall of 5% from last Monday’s high. The is no apparent support between Friday’s close (6871) and 6750.

I don’t see the sky falling in just yet, but it is a time to be conservative and watch one’s stop losses.

My own portfolio also suffered with BID, BPT, LYC and WTC also sold for small losses to protect capital as the stock's outlook was negative.

I purchased LTR, NEA and BSX earlier in the week but none of these moved up against the overall downward pressure of the general market. In fact, my entire portfolio, with the exception of SIQ, fell with the largest loser being CHN (-16%). BPT, OSH, MYX and MVP were all down between 8% and 10%. The overall decline in my portfolio this week was 4.9%.

Continuing the negative theme, most of the listings on my Stocks to Watch page last week have been removed, having experienced strong falls. That’s not to say they won’t turn around next week, but right now, with the market potentially soft, their immediate outlook is unsure. Several highly traded stocks have fallen back to the lower boundary of their price channels and (assuming the price channels are valid) they now have a good chance of moving up. However, they are all high risk and need to evidence a change of trend over the next few weeks, and to buy now could be a case of ‘catching a falling knife’. EMV, NCM, PNV and SLR all fall into this category. TRS I mentioned a few weeks ago because it looked as if it was breaking up out of a pennant pattern. That pattern failed and price fell back but it now looks like the pattern may have been a flag (rectangular) or possibly even a Wyckoff pattern and price may move up strongly.

Monthly update of New Years Stock Picks

On 1 January I picked 11 stocks I saw as having potential to rise this year. One month on the results are a mixed bag with roughly equal numbers of rises and falls. The overall result has been a fall of about 0.8%. WPL was the largest riser (up 7.6%) while BPT was the biggest loser (down 8.9%). You can find the picks listed on my Stocks to Watch page or click HERE

Weekly Blog 22 January 2021

The XAO rose 1.3% this week and is still on target to potentially reach 7,180 in the short-term.

Scanning the market today showed very few potential trades to suggest as many that were building tradeable patterns broke down during the week. That’s not to say they won’t repair that damage next week, only that we need to sit and wait to see if that happens (or a hangover following the Biden celebrations in the US kicks in and provides a week of even lower prices).

My last two weekly reports bemoaned my own portfolio slipping back a little despite the general market moving up. This week saw that situation reversed with 4.0% growth as against the market’s 1.3%. That said, my return for January at 2.0% still lags the market’s 3.3%.

Holdings that improved most dramatically were LYC (+26.1%), FPH (+10.8%) and WTC (+19.7%). I sold my remaining PMT shares during the week for a gain of 25% on the entire trade, CHN was also sold for a gain of 10%, and I exited GEM for a 6% loss because it hasn’t shown any intention of moving up as hoped. GEM probably will rise but with my analysis not fulfilled and several better investments on offer, moving on seemed the best option.

During the week I bought WGN, OSH, COH, LYC and WTC . WGN and LYC were new trades and the others were top ups of existing trades.

Stocks to Watch had CHN added and BID, GEM and OBL were removed because their prices had moved back and/or they were perceived as less likely to achieve their targets.

Weekly Blog 15 January 2021

The XAO really hasn’t moved much for 6 weeks and last week was down 0.5%. I had hoped the strong rise the week before would have continued, to see a break above 7,020 - but this is proving a very strong level of resistance. Perhaps the change of US administration and Biden suggesting new stimulus packages might push the US market up. Friday’s close for the Dow was down 0.6% - suggesting another mediocre Monday for the ASX.

While there have been the odd standout trades this week, such as PME rising 17%, the charts of many stocks on my watchlist are mirroring the XAO in showing a lack of direction. Some of the old favourites like CSL, TCL and FPH whose general history is to trend very well are breaking down and threatening stop losses. While I’m still optimistic prices will break higher there are signs of investor pessimism and another correction is possible.

A retracement now could expect a 5% fall in value of the XAO back to around 6,600. The XAO made an almost identical sideways pattern for 13 weeks back in August before falling 5% - and history does repeat in charting.

My own trades slipped another 1% this week with 50% of my holdings in CSL, TCL and 100% of ALU due to broken stop losses and/or further falls on the horizon. I also sold 50% of my PME trade after it spiked for a 40% gain over about 5 months. I may have jumped early but strong spikes are often followed by strong pull-backs and there was some sign of price faltering – but it recovered to make further 4.5% rise.

I used the capital released by the closed trades for small buys into CIM, WPL, CHN and WTC and to top up holdings in BPT, BID, MVP and COH. I had sold part of my COH holding 2 weeks ago but the stock now appears to have bottomed.

The energy sector is running strongly and possibly has further to go with stocks like WPL, BPT and STO all up about 18% for the month.

My Stocks to Watch last week showed twice as many falls as rises – only the oil stocks increased. A number of the fall were back to support levels where price could be expected to turn up, but NXT and NEA both show signs of potentially falling further. ABC has broken below trend strongly last week and has also been removed from the list as its potential has been reduced. A couple of new stocks in CIM and MVP have been added.

My hypothetical long term trade portfolio being run for students of my educational material showed a similar fate to my Stocks to Watch – down about 2% overall.

In summary it is a time for caution.

Weekly Blog 8 January 2021

This week saw the XAO make a new high last seen almost a year ago. Importantly, this break higher closed above a resistance level, suggesting prices could keep moving up to 7,200 in the short-term.

The increase in price has not been equally distributed across all markets and sectors. My own trades usually show a better outcome than the XAO but since January 1 they have slipped back 1.1% while the XAO has increased 2.5%. While disappointing, trading has moments like this and in my experience you need to trust your analysis and not panic – or sell non-performing trades just to buy something else because ‘the grass is greener on the other side’.

Worst performers for me were MVP (-5.5%), ALU (-8.1%) and PAR (-5.5%). Bright spots did exist with LTR sold for a 13% gain. I jumped out of LTR too early when I saw signs of its rise appearing to falter, but it recovered and went on to increase another 15%.

I sold 50% of my trades in CSL and COH this week as these stocks have both broken below stop losses. I didn’t sell the entire holding because both were at a strong level of support and while they broke below said levels during the week, they subsequently rose to close at or above those support levels. I will rebuy both if they prove they are moving to an uptrend.

During the week I bought OSH, BPT, LYC and OBL

While my own trades are being somewhat recalcitrant, I’m running a hypothetical portfolio of 10 long-term holds for anyone who subscribes to my educational material. That portfolio rose about 2.5% since January 1. My Stocks to Watch last week included 16 stocks of which half rose but by much more than those that fell, with an average overall gain of 4%.

I also listed a portfolio of New Year’s picks on my Stocks to Watch page last week which I’ll review every month to see how they perform.

I’ve removed 7 of the Stocks to Watch on my last bulletin. Two showed significant moves up to near target and no longer represent value for money. The other 5 show price reversals that may only be support retests, but their overhead targets are now less certain of being achieved. Five new stocks have been added but there are many more that show potential - which may augur well for next week.

Weekly Blog 31 December 2020

After two short trading weeks and a market with little direction there’s not much worthy of reporting, so I thought I'd have a look at what 2021 might have in store.

it’s interesting to look at an annual chart of the XAO.

XAO annual candle

First the candle for the last year says it all – it stands out from previous years with its huge range (meaning it's been a year of extremes - which is stating the obvious) and closing almost where it opened. In Candlestick Theory a candle that opens and closes at around the same price is called a Doji and it signifies market indecision – which maybe sums up where we are at right now.

If we change to a line chart of the yearly closing prices it suggests each time price rises to the top of that shaded channel it is followed by a fall back to around the average increase in value of the XAO – shown by the blue dashed line. If this theory holds then it means prices could could close lower at the end of 2021 - it says nothing about where prices might go for the other 364 days.

XAO annual line

I’ve updated my Stocks to Watch page I’ve removed 4 stocks because their price has pulled back and as a result they show less potential. One new stock has been added –OBL.  Interestingly, MLX which I listed 2 weeks ago rose 12% this week following a 19% increase after being featured in Stocks to Watch.

Here’s wishing everyone a prosperous 2021!

Weekly Blog 18 December 2020

With no sign of the annual Santa Rally (a Covid cancellation by the reindeer?) it looks like investors will need to be content with the strong November lift in prices as compensation.

The XAO reached the magic 7,000 level this week but closed lower. The chart still suggests higher prices of around 7,200 to 7,400 are likely before our next material retracement. With the upcoming reporting season likely to be depressed by the Covid recession, perhaps this could be a time for our next pullback?

While the XAO managed a rise of 0.55% for the week, it was a mixed bag which saw large falls such as A2M down 22% on China worries. Despite the trade spat with China, the resource sector gained 0.23% - driven largely by gains in iron ore and gold (the latter rising by 5%). 

My own trading was break even this week with the only noteworthy event being MSB falling 47% on a cancelled drug trial. I sold almost all my holding in MSB weeks ago but kept a (fortunately) very small exposure in case they ‘kicked a goal’. Unfortunately it was an ‘own goal’. With little to lose I’ll see if the price rallies from the new lows, but I’m not hopeful.

PME which had been drifting lower to lose 15% of its value has turned up after reaching the bottom of its price channel. Price rose 8.5% for the week.

To free up some capital and protect profits I sold EOS and STO as well as 50% of my holdings in VOC this week. I see the possibility of further falls ahead before these stocks turn up again.

There were no buys last week as my capital was largely committed, however had that not been the case I would have taken a position in at least one (if not all) of ABR, MLX and MLD which I added to last week's Stocks to Watch page. They rose by 20.2%, 19.1% and 8.4% respectively - so not happy, Jan! (do you know that saying was coined by a 2000 Yellow Pages commercial?).

Stocks to Watch has had 3 stocks deleted and 4 added (WTC, NXT, NEA, PME). While there are certainly more potential trades out there, these 4 stood out as having strong potential.

A Merry Xmas to all and hopefully a few green days to finish off the year.

Contact

Robert Norman

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

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