ASX All Ordinaries Index (.AORD) Market Round-Up

Last week, ASX All-Ordinaries Index (.AORD) took some breath after witnessing continuous upside rally from the past several months and settled at 6940.60 with a decrease of ~1.75 percent for the week ending February 26, 2021. All Ordinary Index prices consolidated in the range of 7038-7110 level during the last week. The market sentiments were impacted by subdued private sector credit report issued jointly by the Australian Bureau of Statistics (ABS) and the Reserve Bank of Australia (RBA) last week. According to the credit report, the total number of new credits issued to housing, personal and businesses fell to 0.2% in January 2021 from 0.3% in December 2020.

As per the technical indicators, prices are still reflecting a golden positive crossover between the 21-period SMA and 50-period SMA indicating a bullish trend. The index is getting an immediate resistance at 7290 level on a weekly chart that is near to the index's recent high level.

Prices are moving steadily upward, and the index may test its 52-week high in the coming weeks considering improving Australian GDP and growing employment rate. The upcoming data events that may impact the market sentiments include an update on Building Approvals data, GDP Quarterly data, and Australian Retail Sales data released monthly.

Global Markets Wrap-Up 

Wall Street witnessed sudden fall in prices last week. S&P 500 settled at 3811.15 with an overall loss of ~2.44 percent while NASDAQ Composite Index settled at 13,192.34 with an overall loss of ~4.91 percent for the week ending February 26, 2021.

A steep rise in Benchmark 10-Year US Treasury yield which rose  by 14 basis points to 1.52% influenced the global markets heavily during the latter half of the last week. The current fall in index prices does not represent the overall trend of the markets and should be considered as a short-term correction from higher levels.

Meanwhile, the US House Democrats passed the $1.9 trillion Biden stimulus plan on February 27, 2021 which includes $1400 stimulus checks for many US citizens which might further increase the overall liquidity in the market.

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 stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for IPH Ltd. (ASX: IPH) and Global Value Fund Ltd. (ASX: GVF) for the next 2-4 weeks duration.

IPH Ltd. 

IPH Limited (ASX: IPH) is a holding company that offers a range of intellectual property (IP) services and products. Its client base includes Fortune Global 500 companies, public sector research organizations, multinationals, small and medium-sized enterprises (SMEs) and professional services firms around the world.

Price Action Analysis (on the Weekly Chart)

IPH’s prices are trading near its 52-week low levels. Prices are currently sustaining above the downward sloping trendline support levels of AUD 5.80. Prices are also hovering around the horizontal trendline. The next resistance level appears to be AUD 7.30 and the stock will achieve this in the next 2-4 weeks’ time frame.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~39 levels, indicating a neutral trend for the stock. The CMP is trading below 21-period SMA and 50-period SMA which are acting as an immediate resistance.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for IPH Ltd. is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that IPH 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:

Global Value Fund Ltd. 

Global Value Fund Limited (ASX: GVF) is an investment company that provides an opportunity to invest in global financial markets through a portfolio of financial assets. The Company derives its revenue from dividend income, interest income, and from the sale of its investments. Below are the key price indicators for the stock: -

Price Action Analysis (on the Weekly Chart)

GVF’s prices broke the downward trendline and prices are sustaining above the breakout level of AUD 1.058. Prices are currently taking continuous support from upward trend line. The next resistance level appears to be at AUD 1.309 and prices should test that level in the given time frame.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~61 levels indicating a bullish momentum in the prices. The increasing volume trend along with an increase in the stock’s price action further indicates the bullish trend. The CMP is above the 21-period SMA and 50-period SMA, further providing strength to the prices.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Global Value Fund Ltd. is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Global Value Fund 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 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 on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: 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.

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 March 01, 2021. 

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  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.