ASX All Ordinaries Index (.AORD) Market Round-Up
Last week, ASX All-Ordinaries Index (.AORD) traded in a range with weak bias. Notably, .AORD settled at ~6798.00 with a decrease of 1.14% for the week ending July 15, 2022. Domestic markets took negative cues from the NAB monthly business confidence data. As per the data released by the National Australia Bank Ltd. (NAB), NAB Business Confidence was down by 5 index points to +1 index points in June 2022 from +6 index points in May 2022 due to the hike in interest rates and inflation.
Meanwhile, the overall ASX index is trading in a weak tone after the prices broke a rising wedge pattern on the weekly chart. As per the technical indicators, prices are trading below 21-period and 50-period SMA and may find the next resistance at the 7291.90 level. The upcoming macroeconomic events that may impact the market sentiments include an update on the AU Monetary Policy Meeting Minutes, Melbourne Institute Leading Index, NAB Business Confidence Quarterly data, and US Unemployment Insurance Claims, released weekly.
Global Markets Wrap-Up
Wall Street indices declined last week continuing its zig-zag price movement from the past several weeks. Notably, S&P 500 settled at 3863.16 with a loss of ~0.93% while NASDAQ Composite Index also declined to reach 11,452.42 with a loss of ~1.57% for the week ending July 15, 2022. Meanwhile, the US indices declined amid an increase in the US unemployment claims data. The seasonally adjusted initial US unemployment claims data published by the US Department of Labor, increased by 9k to 244k for the week ending 09th July 2022 against the unrevised unemployment claims at 235k 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 two ASX-listed stocks from the technical standpoint. Noted below are the recommendations based on generic insights, entry price, target prices, and stop-loss for IDP Education Ltd. (ASX: IEL) and Superloop Ltd. (ASX: SLC) for the next 2-4 weeks’ duration: -
IDP Education Ltd.
IDP Education Limited (ASX: IEL) is engaged in the placement of international students into educational institutions in Australia, UK, USA, Canada, New Zealand and Ireland. Below are the key price indicators for the stock:
Price Action Analysis (on the Weekly Chart)
On the weekly chart, IEL stock price broke a downward sloping trend line by an upside and the prices are sustaining above the breakout point for the past one week. Now the stock is heading towards its next resistance level at AUD 30.000 and in the short-term (2-4 weeks), prices may test the level. An upside movement above AUD 30.000 level supported by volumes may extend buying in the stock to AUD 32.120 level.
Technical Indicators Analysis (On the Weekly Chart)
On the weekly chart, RSI (14-period) recovered from an oversold region to ~48.47 level, indicating positive price momentum. The CMP is trading above its 21-period SMA which indicates positiveness in the stock prices. However, prices are trading below its 50-period SMA, acting as an immediate resistance level. Volume analysis is showing a positive signal for the stock prices.
General Recommendation:
As per the above-mentioned price action and technical indicators analysis, IDP Education Ltd. is looking technically well-placed on the chart, and a ‘Buy’ recommendation has been given on the stock. Investment decision should be made depending on an individual’s appetite for an 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 recommendation is as follows:
Superloop Ltd.
Superloop Ltd. (ASX: SCL) is primarily in the construction and operations of telecommunication infrastructure across the Asia-pacific region. Below are the key price indicators for the stock:
Price Action Analysis (on the Weekly Chart)
On the weekly chart, SLC’s stock prices broke a downward sloping trend line by an upside and the prices are sustaining above the breakout point from past one week. Now, the prices are heading towards its next resistance levels which appear to be at AUD 0.895 and AUD 0.985, 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 reversing from an oversold zone and is showing a reading of ~42.53 levels, indicating bullish momentum. Prices are also trading below its 21-period and 50-period SMA, acting as the immediate resistance for the stock prices. Volume analysis is showing a positive sign for the stock.
General Recommendation:
As per the above-mentioned price action and technical indicators analysis, Superloop Ltd. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision should be made depending on an individual’s appetite for an 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 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:
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the 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 risks, currency risks, social and political instability risks etc.
Note 1: Individuals 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. 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 at which 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 at which 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: In general, 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. This report is based on ~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 Individuals to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Individuals 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, currency, technical indicators, support, and resistance levels is July 18, 2022. 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 individuals. Technical reports in general chart out metrics that may be assessed by individuals 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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