ASX All Ordinaries Index (.AORD) Market Round-Up
Last week, ASX All-Ordinaries Index (.AORD) moved up straight third week amid stiff recovery in the US equity markets. Notably, .AORD settled at ~7785.90 with a surge of 1.25% for the week ending April 01, 2022. Domestic markets improved amid increasing Australian Building Approvals data. According to the Australian Bureau of Statistics (ABS), the total number of dwellings approved increased in February 2022 by 43.5% to 18,675 from 13,015 dwellings approved in January 2022.
Meanwhile, the overall ASX index is trading in a range with a positive bias considering higher lows and higher highs candlestick pattern on a weekly chart. As per the technical indicators, prices also rebounded above to its 21-period SMA and 50-period SMA and finding its next resistance level at 7902.20. The upcoming macro events that may impact the market sentiments include an update on the Australian AIG Construction Index, US Unemployment Claims data, FOMC Meeting Minutes and Australia RBA Financial Stability Review released Half-yearly.
Global Markets Wrap-Up
Wall Street indices continues to witness upside traction from the last three weeks and settled on a positive note. Notably, S&P 500 settled at 4545.86 with an increase of ~0.06% while NASDAQ Composite Index also surged marginally to reach 14,261.50 with an increase of ~0.65% for the week ending April 01, 2022. Meanwhile, the US indices surged last week despite of increase in the US unemployment claims data. The seasonally adjusted initial US unemployment claims data published by the US Department of Labor, increased by 14k to 202k for the week ending 26th March 2022 against the revised unemployment claims at 188k 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 our recommendations based on generic insights, entry price, target prices, and stop-loss for Origin Energy Ltd. (ASX: ORG) and Legend Mining Ltd. (ASX: LEG) for the next 2-4 weeks’ duration: -
Origin Energy Ltd.
Origin Energy Ltd. (ASX: ORG) is an Australia based leading energy company. The company is in the business of the sale of electricity, natural gas, LPG, and green power products to Australian houses. Below are the key price indicators for the stock:
Price Action Analysis (on the Weekly Chart)
On the weekly chart, ORG stock price broke the downward sloping trend line by upside and the prices are sustaining above the breakout trend line from the past three weeks’. Now the stock is heading towards its next resistance level at AUD 6.980 and in the short-term (2-4 weeks), prices may test the level. An upside above AUD 6.980 level supported by volumes may extend buying in the stock till AUD 8.890 level.
Technical Indicators Analysis (On the Weekly Chart)
On the weekly chart, RSI (14-period) is hovering at ~71.93 level indicating positive price momentum. The CMP is trading above its 21-period and 50-period SMA that indicates bullishness in the stock prices. Volume analysis is showing positive signal for the stock prices.
General Recommendation:
As per the above-mentioned price action and technical indicators analysis, we can conclude that Origin Energy 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 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 our recommendation is as follows:
Legend Mining Ltd.
Legend Mining Ltd. (ASX: LEG) is an Australian based exploration and evaluation of mineral properties in Australia. The company is engaged in exploring various products like nickel, cobalt, zinc, silver and gold deposits. Below are the key price indicators for the stock:
Price Action Analysis (on the Weekly Chart)
On the weekly chart, LEG stock price broke its downward sloping trend line by an upside and the prices are sustaining above the breakout level from the past one week. Now, the prices are heading towards its next resistance levels which appears to be at AUD 0.100 and AUD 0.120, and the stock may test these level 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 trading at ~58.57 levels indicating bullish momentum. Prices are also trading above its 21-period and 50-period SMA that also support the bullish stance. Volume analysis is showing positive sign for the stock.
General Recommendation:
As per the above-mentioned price action and technical indicators analysis, we can conclude that Legend Mining Ltd. is looking technically well-placed on the chart and we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investor’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 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.
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 April 04, 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 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.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.