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.

Weekly Blog 11 September 2020

With the XAO down 1.1% for the week it has now fallen for 3 weeks in a row with the last 2 of those closing below an uptrend line – which is a formal sell signal. If the XAO falls below 5,992 then it will have made a lower weekly trough and if this is followed by a lower peak, it is starting to look like a more sustained rout might be on the horizon. A fall to 6,000 or even 5,400 is possible, but as said previously my favoured view is that prices will push up to 6,800 or 7,200. Perhaps the road map ahead is a pull back and then a move up – but it's not a time to panic.

This week I bought TCL, perhaps a little prematurely because, despite losing some ground this week it has made two consecutive closes above a weekly downtrend – which is a buy signal. I also bought CSR which I commented on last week and my trade remains in profit (but only just) in spite of an adverse week.

I sold RED for a small profit as it hadn’t performed as hoped.

A few stocks I am watching are building potential tradeable patterns. Long-term trade potentials are WOR, OZL and ORI, while short-term trades might come from the likes of NUH, COH, BLD & SGM.

Weekly Blog 4 September 2020

This was a roller coaster week – 3 days down followed by 2 days to climb back to exactly where the week started - only for things to fall off a cliff on Friday when the XAO fell back to almost precisely (but importantly, not below) Wednesday’s low. Price is sitting on the lower boundary of a price channel that’s been holding since 15 June. If prices keep heading lower next week and break out of the channel, I’d expect it could fall back to 5,832 (8% off last week’s high) which would almost be a technical correction (10% decline).

This week I sold BHP after it fell back 6% and broke my stop loss. My trade was about break even but having sold when the stock went ex-dividend, I made a small profit (including the dividend) of about 2.2%.

I also sold AGL when it broke my stop loss. It had a drop of over 11% on an release that failed to impress the market, recovered a little and then fell lower to make a new 5 years low. The trade never fired so it never advanced beyond the original tranche meaning my exposure was small (I initially buy about one third of my planned total purchase and then top that up as price moves up).

I bought SXY during the week (see last week’s blog and my stock commentary page) and after today’s stumble by the market I’m still in profit – so hopefully next week will see SXY move up.

I’ve seen a number of promising trades building through the week but with today’s decline possibly predicting more falls next week, now is perhaps not the time to buy. That said, one that did catch my eye was CSR. I backtested CSR this week to determine some long-term trading rules and it really showed a great result with 5 positive and no losing trades from 2015 to date. The overall return was 221% based on the simplified trendline trading technique outlined in my educational material. The backtest also confirmed a new trade could have been entered in April and as price is currently not far in front of where it was back in April, I may buy in next week (assuming market Armageddon doesn’t seem to be happening!). The backtest will be on my video stock commentary soon – check it out. CSR was one of only a few stocks to rise today - that has to be another positive.

Weekly Blog 28 August 2020

The XAO did manage to move up a little this week, 6300 remains a line in the sand that XAO can’t get over. As it has made a higher low followed by a higher high, maybe next week with see a break higher and my target of 6,800 become more likely. The alternative view, and possibly the most likely, after the last two weeks have made doji which are reversal candles. While, a fall next week (or next couple of weeks) back to 5800 is quite plausible, my preferred option is a break higher as I can’t see what the catalyst would be that sent the market lower. Perhaps Trump will throw a few more rocks at China’s windows!

 There have been some big rises and falls on the ASX 300 this week, with SPL the standout achiever up 38% and WHC the biggest loser - down 27%

There are a number of interesting trade opportunities on the radar this week and I bought VOC, M7T and PME – all of which I flagged as potential trades in last week’s blog. I also bought back into EOS and FPH having sold out of successful trades recently. BHP and SPK were existing trades that I topped up after their price moved up.

On the negative side of the ledger I sold out of trades in IPH and IPL both for losses (12% and 7% respectively) after their price broke stop losses. I usually buy my shares in 3 tranches as explained in my educational material and neither stock had moved up so both were a minimal holding.

What do I like this week? The stocks below have apparent entries for trades and while there are many other potential opportunities, I’ve only looked at stocks on my extended watch list.

SXY has a potential 11% gain based on a resistance break pattern. SXY is a tricky beast to trade and often doesn’t do what is expected.

PPS is a classic Trendline Trading Technique entry – closed above a downtrend and making higher lows and highs. The only negative apparent to me is that price could fall into Elliott Wave 2 and head back towards the $0.30 area. I need to post a video of a backtest.

XAO 27Aug2020

Weekly Blog 21 August 2020

The XAO has ever so slowly inched higher over the past 12 weeks while it has traded in a range between resistance and support levels of 5800 to 6300. This week it made a new high for that period and as such has the potential to move up to 6800. This week’s candle was a doji which suggests indecision in the market, something that might see prices fall back next week. Some positive news on the virus front might be necessary to see prices rally, but higher prices next week are not out of the question either.

On the trading front last week was a good one with BAP, COH and WTC closed out for acceptable profits. BXB was the only purchase for the week.

Last week I said PPS and ORI were looking like potential trades. PPS has moved up to $0.545 and effectively achieved the target of $0.555. The jury is still out on ORI after it initially moved higher only to fall back a little and make a Harami candle – which does hold out hope of a rise next week.

Stocks of interest this week are VOC, PME & EOS

Weekly Blog

The XAO has continued its sideways drift of 10 weeks and shows little conviction. However, if it can break and close above 6320 with some volume a target of 6800 is quite likely. With the ASX reporting in full swing and Covid19 still lurking in the background, a move up probably will require some positive news on one or both of those fronts.

The week provided me with a wild ride on a trade in MSB which I closed out for and 11% profit. I also bought AWC and details of both trades can be seen in Stock Commentary.

Starting this week I thought I’d also identify a couple of stocks which show potential to be profitable trades. PPS and ORI, are analysed in Stock Commentary. Note that my analysis is provided purely for educational purposes and should not be construed as advice to deal in any particular stock.

 

XAO 16Aug2020

Weekly Blog

The market continued to underwhelm this week with the XAO not trading outside of a 3.2% range since the start of June. With reporting season kicking off the market may be waiting for some good news after having factored in gloom and doom from Covid19. Some positive results from Victoria’s lockdown might also encourage some buying.

This week saw no trades closed out but a buy into PLS.

Contact

Robert Norman

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

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