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

Last week, ASX All-Ordinaries Index (.AORD) prices reached  record high of 7331.10 after breaking the previous all-time high of 7289.7 and settled at 7325.80 with an increase of ~1.01 percent for the week ending April 16, 2021. Markets made record highs in-line with the US S&P 500 index that also made its all-time high levels last week. Prices also took support from the recent Australian Westpac-Melbourne Institute Index of Consumer sentiment which surged to 11-year high levels. The index has increased by 6.2% to 118.8 in April compared to 111.8 in March.    

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 recently broke the all-time high levels of 7289.7 level on a weekly chart and prices might be heading towards its next resistance level of 7714 level. The upcoming data events that may impact the market sentiments include an update on NAB Quarterly Business Confidence data, Retail Sales data, and MI Leading Index data released monthly.

Global Markets Wrap-Up

S&P 500 continued its northward direction and again made a new record high last week. S&P 500 made a high of 4191.31 and settled at 4185.47 with an overall gain of ~1.37 percent while NASDAQ Composite Index settled at 14,052.34 with an overall gain of ~1.09 percent for the week ending April 16, 2021. Markets reacted positively due to lower US weekly unemployment claims data that have declined last week to 576,000 from 769,000 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 Newcrest Mining Ltd. (ASX: NCM) and Evolution Mining Ltd. (ASX: EVN) for the next 2-4 weeks duration: -

Newcrest Mining Ltd. 

Newcrest Mining Limited (ASX: NCM) is a metals and mining company engaged in the exploration, operations, development, and sale of gold and gold or copper concentrate. Its portfolio of mines and projects includes Telfer, Cadia, Gosowong, Lihir, Red Chris, and Wafi-Golpu. The summary of stock’s key price indicators is provided below: -

Price Action Analysis (on the Weekly Chart)

NCM prices broke the horizontal trend line at AUD 26.55 level on April 14, 2021 and trading above the breakout level. Now the next immediate resistance level appears at AUD 33.50 and in the short-term (2-4 weeks), prices may test the level. An upside above 33.50 level accompanied by volume may extend buying in the stock till AUD 37.00 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is hovering at ~55.36 levels indicating a positive trend for the stock. The CMP is trading above 21-period SMA that is supportive for the stock prices. However, stock prices are trading below 50-period SMA acting as a resistance level for the stock prices. Volumes are increasing along with prices further indicates long build-up occurs in the stock.

Financial Summary:

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

General Recommendation:

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

Evolution Mining Ltd.

Evolution Mining Limited (ASX: EVN) is a gold company which operates mining projects in Australia and New Zealand. Its activities include operating, identifying, and developing gold-related projects and assets consist of five whole-owned mines: Cowal, Mt Carlton, Mt Rawdon, Cracow, and Mungari. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

EVN prices have taken the support of an upward sloping trend line recently at AUD 3.79 and sustaining above the support level for the last few weeks. Prices started to move upward after almost 6 months of bearish movement and for the short-term (2-4 weeks), we can expect continuity of a positive movement in the stock. Now the next immediate resistance levels appear at AUD 5.850 and AUD 6.600 and prices may test the level in the coming period.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI has moved up to ~50.48 levels from oversold zone indicating a positive trend for the prices. The CMP is trading above the 21-period SMA, which is supportive for the future price movement. However, stock prices are trading below 50-period SMA acting as a resistance level for the stock prices. Volumes are increasing along with prices further indicates long build-up occurs in the stock.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Evolution Mining 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 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 April 19, 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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