Wait for feeding frenzy on minnows

THERE was more volatility last week as on April 21 the market closed below the previous week’s low and this formed a weekly pivot point to the downside.

All three indices I watch formed weekly pivot points to the downside, so there were no divergences to encourage me to think that this week might be a more positive week.

It was also interesting to note that after the US markets had big gains on Monday and Tuesday this week, we still had an average Wednesday – so it looks like we may not see a clear reversal of last week’s move this week.

That would require a weekly pivot point to the upside, which would require a close today above 5936 points on the All Ordinaries.

What will really indicate the market is heating up is an increase in volume in the stocks trading around 10c and below.

That’s because this is the sector of the market that smaller traders favour.

When volumes in this sector increase, it indicates these small traders are showing interest.

This is happening in only a few stocks at the moment but I suspect this will change in the near future.

On the positive side, the gap between the All Ords and the benchmark ASX 200 index had closed to 24 points on Wednesday this week and the SPI futures was 14 points below the ASX 200.

The more these gaps close, the stronger the market is performing.

My market scan last weekend showed that much of the damage to the market was in mid-priced stocks.

The number of stocks between 10c and $2 that showed positive was the lowest in a long time.

This weakness helps to explain the losses in the few stocks in our portfolio that were stopped out.

Talking of being stopped out, Resapp Health, which closed below its stop on April 19, was sold the next day at 32.5c for a total of $8105 after brokerage.

This was another fairly large loss so I was pleased to see the other two stocks held both closed on Wednesday higher than the previous week’s close.

The A2 Milk Company had a big move up on Wednesday when it opened with a gap above the two-week sideways move below $3 and continued up to close 1c below its high at $3.20.

The next price resistance will be around $3.50, which is a projection above the pattern formed since the end of 2015.

I will continue to raise the trailing stop to the low of each small pullback and the uptrend may even stay in place beyond $3.50 without triggering the trailing stop.

When companies raise funds by making share issues that are nonrenounceable, I believe they are deliberately disadvantaging small shareholders to the benefit of large and institutional shareholders and it should be challenged legally.

It will be interesting to see if Tawana Resources continues this practice.