Few stocks show promise

AT THE end of last week there was a clear divergence between the ASX 200 and the SPI futures indicating the market should move up.

Although the SPI opened lower on Tuesday morning, it then moved up to close the day 30 points higher, then moved up a further 25-odd points on Wednesday.

The problem as I see it, is if this move up falters and reverses then we are likely to see the All Ords move lower to 5700, then possibly as low as 5000 where there is strong support.

The 5000 mark is the base in the pattern going back to mid last year and is also a target projection if the All Ords falls below 5600.

The major banks and Telstra are weighing heavily on our market at the moment and I suspect we will need to see some other stocks show some leadership before the market moves up with any conviction.

The banks have all clearly broken below support going back to the middle of last year.

The downtrend in Telstra has continued unabated since early 2015 and now looks set to break below $3.

It is quite possible it will continue down below the 2010 low, but it is likely to trade sideways around $3 for a while before moving lower, as $3 is a strong support level.

At the moment it is hard to find any stocks that show much promise. There were very few stocks that came up on my search over Easter.

I am hoping that will change this week as part of the reason for the low numbers was the low volumes leading up to Easter and possibly that traders were wary of committing to the market over the Easter break due to recent volatility in the Dow Jones index.

Short weeks can be trying. Last week again took its toll on the portfolio as two stocks closed below their stops and another was sold on Thursday.

Lithium Australia was sold on Tuesday at 15.5c for a total of $7730 after brokerage.

It continued to fall and touched 14c before closing on Wednesday at 14.5c. It could well now fall to around 10c where the next support level may halt the fall. Australian Tin Mining closed below its stop on Tuesday and was sold on Wednesday at 1.7c for a total of $6780 after brokerage.

As it has now broken the pattern formed since January the next target on the downside is below 1c.

However, the low it touched on Wednesday was 1.5c which is the top of the sideways trading range between August 2016 and the end of last year.

It did bounce off this level and it may rebound from here. If it does move up again it may present another buying opportunity,

so again I will keep an eye on it.

CCP Technologies closed below its stop on Wednesday and was sold yesterday and the details will be in next week’s column.

Both Australian Vanadium and Bass Metals performed strongly.