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

ASX All-Ordinaries Index (.AORD) maintained upside momentum but has been consolidating in the range 6921-7100 from the past couple of weeks due to lack of any major events. Index prices closed in green last week taking cues from rising global indices. .AORD settled at 7063.10 with an increase of ~1.49 percent for the week ending March 26, 2021. Markets also took support from the recent Australian Conference Board leading Economic Index (LEI) data which remained unchanged in January to a level of 113.2.

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 near its’ recent high level. The upcoming data events that may impact the market sentiments include an update on Building Approval data, Retail Sales data, and AIG Manufacturing Index data released monthly.

Global Markets Wrap-Up 

Wall Street witnessed an upside momentum last week and S&P 500 surpassed its previous all-time high levels.  S&P 500 made a new lifetime high of 3974.53 and settled at the same price with an overall gain of ~1.57 percent while NASDAQ Composite Index settled at 13,138.72 with an overall loss of ~0.58 percent for the week ending March 26, 2021. Markets reacted positively over the US weekly unemployment claims data which fell last week below 700,000 to 684,000 from 781,000 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 Adbri Ltd. (ASX: ABC) and Nufarm Ltd. (ASX: NUF) for the next 2-4 weeks duration: -

Adbri Ltd. 

ADBRI Limited (ASX: ABC) formerly Adelaide Brighton Limited, is a construction material and lime producer company. It supplies building, construction, infrastructure, and mineral processing products all over Australia. The summary of stock’s key price indicators is provided below: -

Price Action Analysis (on the Weekly Chart)

ABC's prices are consolidating above a downward sloping trendline breakout for the past 4 months. Last week prices started to catch an upside momentum, while broke an immediate resistance level of AUD 3.420 on March 25, 2021 and still hovering around the breakout level. For the next couple of weeks, we can expect further upside movement in the stock, and it can test the major resistance level of AUD 3.940 on the upside. Any further breakout above AUD 3.940 coupled with the higher volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is hovering at ~56.58 levels indicating a positive trend for the stock. The CMP is also trading above 21-period SMA and 50-period SMA that is supportive for the stock prices.  

Financial Summary: 

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

General Recommendation:

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

Nufarm Ltd. 

Nufarm Limited (ASX: NUF) is a marketer and manufacturer of chemicals for crop protection solutions and seed technologies. It manufactures, develops, and sells crop safety solutions including insecticides, herbicides, and fungicides to protect crops against pests, weeds, and disease. Below are the key price indicators for the stock: -

Price Action Analysis (on the Weekly Chart)

NUF's prices broke a downward sloping trend line resistance level of AUD 4.85 on January 29, 2021, and since then, prices are hovering around the breakout level. Recently prices started to move upside after taking the support of the trendline, indicating an upside movement in the stock. In the short-term (2-4 weeks) prices may test the major resistance level of AUD 6.09 on an upside. Any further breakout above AUD 6.09 coupled with the higher volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~60 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 Nufarm Ltd. is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Nufarm 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 March 29, 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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