Overextended strength
The market begins to fatigue after a powerful rally. So what will it be? A buyback pullback or another demoralising selloff?
The ASX 200 breaks an 8-day winning streak last Friday after a powerful 5.3% rally from March 20 lows. A pullback seems increasingly plausible, which serves as an opportunity to show us the true colours of recent strength. Will distribution and volatility pick up, sending the market into a lower low? Or does the market catch a bid and dish out some more right hand side, creating a buyable pullback?
The Economic Calendar (AEDT) is pretty stacked for this week, so expect some volatility.
Wednesday 10:30 pm: US Inflation Rate
Thursday 4:00 am: FOMC Minutes
Thursday evening: UK GDP, US PPI
Friday 10:30 pm: US Retail Sales
All-in-all, this is a pretty shit market for traders. The strength of indices has been disguised by that of a few megacap US tech stocks. This is the type of market where positions have to remain nimble as the rally might have the word ‘bear market’ in front of it. That said, traders should not give up. This is an opportune time to keep an eye out for future leaders.
Week in Review
Sectors in Review
Weekly Watchlists
My charting process involves manually going through 200-500 charts a few times a week. My filter is quiet simple: The stock must trade above its 200-day moving average and trade above 1 cent.
The charts are then categorised into three categories (we’ll call them 1, 2 and 3).
1: Top tier set ups and high-profile stuff to watch
2: Set ups that need a little bit more time or not quiet there yet
3: Stuff that’s already broken out (e.g. might’ve been 1/2 in previous weeks) or interesting charts that aren’t my style
The charts below typically come from (1).
Here’s the link to all of this weeks charts (txt format for TradingView)
Stocks of Interest
A lot of the same names from previous weeks. A few bases just chugging along.
Audinate (AD8): Base, been fairly low volatility through March.
DeGrey (DEG): Gold pushing through US$2,000, how will it hold up after US inflation and FOMC? DEG tried to breakout, now pulling back to base.
Duratec (DUR): Been a very strong trender. Faded an 8% rally on Wednesday, 5 April. Remains in base.
Ridley Corp (RIC): 8-month base. Invesco Agriculture ETF (DBA) also trying to breakout of a similar base formation.
Tourism Holdings (THL): From last week. Very illiquid but in a so-far stable base.
XRF Scientific (XRF): Another strong trending chart. Holding the base.