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

Recently, ASX All-Ordinaries Index (.AORD) broke the major resistance level of 6598.90 (on November 11, 2020) and is trading above its nine-monthly high. It settled at 6186.80 with a marginal gain of ~1.14 percent on a weekly basis for the week ending November 27, 2020. Prices are trading steadily upward and are likely to test its 52-weeks high in the coming period taking cues from the recent global market performance. As per the technical indicators, prices are giving SMA golden crossover wherein the 21-period SMA is crossing the 50-period SMA indicating a bullish trend. The index is getting an immediate resistance at 7277.8 level on a weekly chart which is near to the index's previous all-time high level.

Global Markets Wrap-Up

Wall Street witnessed a decent upside rally in recent weeks and made an all-time new high of 3645.99 on November 9, 2020. S&P 500 settled at 3638.35 with an overall gain of ~2.27 percent weekly basis while Dow Jones Industrial Average settled at 29910.37 with an overall gain of ~2.21 percent weekly basis for the week ending November 27, 2020. US markets rallied on an expectation that the US Food and Drug Administration may approve the COVID-19 vaccine in the upcoming months. Other upcoming events that may impact the index performance include ISM manufacturing PMI data followed by the US unemployment data, and the US ADP National employment data to be released on  December 5, 2020, which may impact the market sentiments.         

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 Perpetual Ltd (ASX: PPT) and Cimic Group Ltd (ASX: CIM) for the next 2-4 weeks duration.

Perpetual Ltd. 

Perpetual Ltd. (ASX: PPT) is an ASX-listed diversified financial services company that provides wealth management services to high net worth individuals, families, and businesses. The company is also a leading provider of corporate trustee services. Noted below, are the key price indicators for the stock: -

Price Action Analysis (on the Weekly Chart)

Last week, PPT stock prices broke the upper band of the channel at AUD 33.50 on November 25, 2020, and prices are sustaining above that level. Now the next important resistance level appears to be at AUD 44.03 and in the short-term (2-4 weeks), the prices may test that level. Any breakout above the AUD 44.03 level accompanied by the higher volumes may further extend the buying rally in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~59 levels, indicating a positive trend in the stock. The volume appears to be supportive of the stock’s price action and indicates the bullish trend. The CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

Financial Summary: 

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Perpetual Ltd. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Summary of our recommendation is as follows:

CIMIC Group Ltd. 

CIMIC Group (ASX: CIM) is an ASX-listed multinational contractor company that deals in engineering-led construction, mining, and other services. The company is also engaged in Public-Private Partnership (PPP) business model. It has a presence in Australia, Southeast Asia, New Zealand, and the Middle East.

 Price Action Analysis (on the Weekly Chart)

CIMIC Group (ASX: CIM) Ltd.’s stock price is sustaining above the downward trend line breakout, while also broke the resistance level of AUD 24.00 on November 23, 2020. Therefore, it appears that the prices in the short-term (2-4 weeks) may test the next resistance level of AUD 31.75. Any breakout above the AUD 31.75 level accompanied by the higher volumes may further extend the buying rally in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~59 levels indicating a bullish momentum in the prices. The supportive volume trend along with an increase in the stock’s price action further indicates the bullish trend. The CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that CIMIC Group Ltd. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. 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 risks, currency risks, and social and political instability risks etc.

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. The reference date for all price data, volumes, technical indicators, support, and resistance levels is 30^th November 2020. 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.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is 30^th November 2020.

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.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

AUD: Australian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis and technical reports in general chart-out metrics that may be assessed by investors. The above are illustrative analytical factors used for evaluating the stocks, other parameters can be looked at along with additional risks per se.

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