ASX All Ordinaries Index (.AORD) Market Round-Up
Last week, ASX All-Ordinaries Index (.AORD) broke four weeks’ losing streak and provided positive closing mainly supported by the US indices. .AORD settled at ~7617.30 with a weekly gain of 1.75% for the week ending October 08, 2021. However, despite the positive weekly closing, .AORD was not able to sustain above the trend indicator 21-period SMA on a weekly chart. Domestic markets traded in a positive tone despite the negative Australian retail sales data (seasonally adjusted) which posted -1.7% loss to reach AUD 29.275billion compared with AUD29.779 billion in July 2021, according to the Australian Bureau of Statistics (ABS).
As per the technical indicators, prices are now trading below the 21-period SMA. The index prices are now getting its next resistance level of 7648.81. The upcoming macro events that may impact the market sentiments include an update on Australian NAB Business Confidence, FOMC Meeting Minutes, Australian Employment Change data and US Unemployment Claims released weekly.
Global Markets Wrap-Up
Wall Street indices showed some positive move last week with S&P 500 settled at 4391.34 with a gain of ~0.78% while NASDAQ Composite Index also settled at 14,579.53 with a marginal gain of ~0.08% for the week ending October 08, 2021. Meanwhile, the US markets took positive cues from the decent ADP Non-Farm Employment change data coupled with decline in the US unemployment data. Notably, the ADP Non-Farm Employment Change data increased by 568,000 in September versus August 2021.
Also, the seasonally adjusted initial US unemployment claims data published by the US Department of Labor, decreased by 38k to 326k for the week ending 02nd October 2021 against the revised unemployment claims at 362k in the prior week.
Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of ASX All-Ordinaries Index (.AORD) for the upcoming week, now let us have a look at the two ASX-listed stocks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Alumina Ltd. (ASX: AWC) and Ramelius Resources Ltd. (ASX: RMS) for the next 2-4 weeks’ duration: -
Alumina Ltd.
Alumina Ltd (ASX: AWC) is an Australian holding company. The company is engaged in the bauxite mining, alumina refining and aluminum smelter. The summary of stock’s key price indicators is provided below: -
Price Action Analysis (on the Weekly Chart)
On the weekly chart, AWC stock price broke the downward sloping trend line by an upside and sustaining above the same from past one month, indicating upward price trend. Now the next immediate resistance level appears at AUD 2.495 and in the short-term (2-4 weeks), prices may test the level. An upside above AUD 2.495 level supported by volume may extend buying in the stock till AUD 2.96 level.
Technical Indicators Analysis (On the Weekly Chart)
On the weekly chart, RSI (14-period) is hovering at ~68.21 level indicating positive price momentum. The CMP is trading above the 21 period SMA and 50-period SMA that indicates bullish trend for the stock. Volume analysis is showing positive signal for the stock prices.
Financial Summary:
Summary of the Key Financial Metrics for the past four years for Alumina Ltd. is as follows:
General Recommendation:
As per the above-mentioned price action and technical indicators analysis, we can conclude that Alumina Ltd. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investor’s appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical indicator analysis, and fundamental analysis has not been considered in this report. Summary of our recommendation is as follows:
Ramelius Resources Ltd.
Ramelius Resources Ltd (ASX: RMS) is an Australia-based mining company. The company is engaged in the gold exploration, and the production of gold with exploration activities. The Company currently operates the Edna May, Mt Magnet, Vivien, and Marda gold mines. Below are the key price indicators for the stock:
Price Action Analysis (on the Weekly Chart)
On the weekly chart, RMS stock price recently took crucial support of the downward sloping trend line. Now, the prices are heading towards its next resistance level that appears to be at AUD 1.616 and AUD 1.995, and the stock may test these levels in the short term (2-4 weeks).
Technical Indicators Analysis (On the Weekly Chart)
On the weekly chart, the momentum indicator RSI (14-period) is hovering at ~45.53 levels indicating bullish momentum for the stock. However, prices are trading below 21-period and 50-period SMA acting as an immediate resistance level. Volume analysis is showing positive sign for the stock.
Financial Summary:
Summary of the Key Financial Metrics for the past four years for Ramelius Resources Ltd. is as follows:
General Recommendation:
As per the above-mentioned price action and technical indicators analysis, we can conclude that Ramelius Resources Ltd. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investor’s appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical indicator analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:
Upcoming Major Global Economic Events
Market events occur on a day-to-day basis depending on the frequency of the data and generally include update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the ASX All-Ordinaries Index and listed stocks’ prices:
Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.
Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation in the ‘Entry Price’ can be considered depending upon the upside potential expected and taking into consideration the Target 1 and trailing stop-loss levels indicated. For example: - An Investor can consider entering the stock at or above a certain range (3%-5%) from the Entry Levels recommended depending upon the potential upside expected and difference from the Target 1 and Trailing-Stop Loss Levels indicated for the stock.
Note 1: Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above.
Note 2: How to Read the Charts?
The Green colour line reflects the 21-period moving average while the red line indicates the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume and we consider stocks with greater than or equal to 500,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.
A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.
The reference date for all price data, volumes, technical indicators, support, and resistance levels is October 11, 2021. The reference data in this report has been partly sourced from REFINITIV.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
AUD: Australian Dollar
RSI: Relative Strength Index
Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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