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

ASX All-Ordinaries Index (.AORD) is broadly consolidating in the range 6921-7100 from the past couple of weeks and closed in a negative tone last week amid selling pressure in Energy sector and heavy volatility in the global indices. AORD settled at 6959.60 with a decline of ~0.78 percent for the week ending March 19, 2021. Markets reacted negatively over the worst single day crude oil sell off since September 2020 on March 18, 2021 which tanked by 7.12%.

Meanwhile, Australian seasonally adjusted employment data released last week by Australian Bureau of Statistics (ABS) rose by 88,700 in February 2021 up by 0.7% compared to prior month.

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.  The upcoming data events that may impact the market sentiments include an update on IHS Markit Flash Manufacturing PMI and Services PMI data for Australia, Australian Goods Trade Balance data, and CB Leading Index data released monthly.

Global Markets Wrap-Up 

Wall Street dropped last week after 10 Years US Treasury yields rose to its 14-months high of 1.732%.  Markets also reacted negatively owing to rise in US weekly jobless claims data which increased last week to 770,000 from 725,000 the prior week. Also, the sharp downside reaction in crude oil prices urged selling among the investors due to margin shortfall.

S&P 500 slipped last week after making a new lifetime high of 3974.11 and settled at 3913.09 with an overall decline of ~0.76 percent while NASDAQ Composite Index settled at 13,215.23 with an overall loss of ~0.78 percent for the week ending March 19, 2021.

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 Silver Lake Resources Ltd. (ASX: SLR) and Berkeley Energia Ltd. (ASX: BKY) for the next 2-4 weeks duration.

Silver Lake Resources Ltd. 

Silver Lake Resources Limited (ASX: SLR) is an ASX-listed gold producing and exploration company. The Company’s divisions include Mount Monger Operation and Deflector Operation. The summary of stock’s key price indicators is provided below: -

Price Action Analysis (on the Weekly Chart)

SLR recently took the support of an upward sloping trendline and started to move upside. The next important resistance level appears at AUD 2.40 and prices may test that level in the coming sessions. Any further movement above AUD 2.40 level accompanied by increase in volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI has moved up to ~44 levels from oversold region of ~30 levels, indicating a positive trend for the stock. The CMP is trading below 21-period SMA and 50-period SMA which are acting as a resistance for the stock prices.  

Financial Summary: 

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Silver Lake 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.  Summary of our recommendation is as follows:

Berkeley Energia Ltd. 

Berkeley Energia Limited (ASX: BKY) is a mineral exploration and development company. It is engaged in developing the Salamanca mine in Western Spain, a European uranium project. Below are the key price indicators for the stock: -

Price Action Analysis (on the Weekly Chart)

BKY's broke a symmetrical triangle pattern by an upside on February 12, 2021 and for the past 6 weeks, prices are hovering around the breakout level. Prices recently started to move upside after taking the support of a downward sloping trend line of the symmetrical triangle pattern and for the short-term (2-4 weeks), we can expect further upside movement in the stock. Now the next important resistance level is at AUD 0.880 and prices may test the resistance level in the coming session. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~55 levels indicating a positive trend for the prices. The CMP is above the 21-period SMA and 50-period SMA, which might provide support to the stock prices.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Berkeley Energia 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 22, 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.

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