Fall, divergence dampen confidence
ALTHOUGH last week our share market traded above the high of the previous week, it did not close above the previous week’s high.
As a result there was no weekly pivot point to the upside. As of Wednesday this week – when this column is written – it would have been a big ask for the All Ords to close above 5826 points this week, as it was down to 5703 at Wednesday’s close.
The futures contract has also reverted to trading around 50 points below the ASX 200, indicating a loss of market confidence, but divergences between the indices has confused the issue.
However, to Wednesday it was the banks and big miners suffering, but the medical, tech and small gold stocks were still moving up.
It will be interesting to see how the market closes out the week, because if it continues down from Wednesday we may see a new low for the move since April’s high and that would dampen my enthusiasm.
To reach a new low, the All Ords would have to trade below 5670 points.
Two stocks bought recently have performed as expected.
Pantoro (PNR) has continued to trade around 24c (its February high) – and this is likely consolidation before moving up.
A2 Milk Company (A2M) had a big move up over the past week without a pullback, which did not give me anywhere to put my trailing stop to lock in some profit.
Tuesday and Wednesday’s moves this week were both within the top portion of the prior week’s move and I will now move the trailing stop to the bottom of the trading range over this two-day period, which is $3.80.
The $4 level is a target I mentioned last week and A2M traded to $3.95 on Monday this week.
The two inside days (where the price traded within the range of the previous day) indicate there are likely higher highs to come, hence I will hold it until it continues up or breaks its stop.
Resmed (RMD) traded within Tuesday’s range, indicating to me that it is likely to continue moving up despite the overall market.
As yet it has not moved in a manner for me to raise its trailing stop
As a result of the big move down on Wednesday I will not buy any new stocks until the market stabilises.
As I mentioned above, if the All Ords trades below 5670, I will reassess my belief the market has resumed the uptrend.
It is interesting to note quite a number of small gold stocks have been relatively strong, which could indicate the Australian dollar is likely to come under pressure as they would benefit from any fall.
However, other gold stocks have fallen, possibly indicating different forward selling strategies from one company to the next.
Meanwhile some of the other stocks mentioned recently have been a mixed bag, some moving up, but others have not moved in a manner to form buy signals.