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

Last week, ASX All-Ordinaries Index (.AORD) traded above its nine-monthly high and settled at 6865.30 with a marginal gain of ~0.71 percent for the week ending December 04, 2020. Prices are moving steadily upward and may test its 52-weeks’ high in the coming sessions taking positive cues from recent Australian quarterly GDP data and global market performance. According to the Australian Bureau of Statistics (ABS), Australia’s quarterly GDP data (in seasonally adjusted chain volume terms) showcased an improving trend as it surged up to 3.3% in the September 2020 quarter as compared to a record fall of 7.0% in the June quarter as COVID restrictions eased in most parts of the country. As per the analysis of the technical indicators, prices are 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 7277.8 level on a weekly chart that is near to the index's recent high level.

Global Markets Wrap-Up 

Wall Street continued its upside rally in the past week. S&P 500 made an all-time new high of 3699.20 on December 4, 2020. Despite the overall damage caused by the COVID-19 pandemic, S&P 500 index witnessed an overall gain of 14.45% year till date. S&P 500 settled at 3699.12 with an overall gain of ~1.67 percent weekly basis while Dow Jones Industrial Average settled at 30218.26 with an overall gain of ~1.03 percent weekly for the week ending December 04, 2020. Markets reacted positively over the news as the UK may start providing COVID-19 vaccination from Tuesday, December 8, 2020. The US also might take any decision by the end of the week as the US Food and Drug Administration’s (FDA) emergency approval is pending for the Pfizer Inc. (NYSE: PFE) vaccine on Thursday, December 10, 2020. The US markets rallied on the data of lower US claims for jobless. As per the data reported by the US Bureau of Labor Statistics on December 4, 2020, the total nonfarm payroll employment rose by 245,000 in November, while the unemployment rate stepped down to 6.7 percent. Few upcoming events that may impact the market sentiments next week include an update on the US CPI data followed by the US unemployment claims data, and the US PPI data.

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 Nufarm Ltd (ASX: NUF) and Vicinity Centres (ASX: VCX) for the next 2-4 weeks duration.

Nufarm Ltd. 

Nufarm Ltd. (ASX: NUF) is an Australian agricultural chemical company established in 1956. The company provides seed treatment products to the farmers that give protection and treatment for damage caused by insects and fungus. The company manufactures and sells crop protection products like insecticides, herbicides, and fungicides. Noted below, are the key price indicators for the stock.

Price Action Analysis (on the Weekly Chart)

Recently, NUF's prices broke the downward trend line at AUD 4.01 on November 16, 2020, and the prices are sustaining above that level. Now the next important resistance level appears to be at AUD 4.85 in the short-term (2-4 weeks). Any breakout above the AUD 4.85 level accompanied by the higher volumes may further extend the buying rally in the stock. Currently, prices are getting support of 21-period SMA.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~52 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 but trading below 50-period SMA which acting as an immediate resistance.

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. Summary of our recommendation is as follows:

Vicinity Centres 

Vicinity Centres (ASX: VCX) is a leading retail property group. The company is engaged in retail property investment, property management and development. The company operates various shopping centres across Australia.

Price Action Analysis (on the Weekly Chart)

On the weekly chart, VCX’s prices broke the resistance level of AUD 1.692 on November 23, 2020 and sustaining above the breakout level since the past two weeks. Now the next important resistance level appears to be at AUD 2.22, and in the short-term (2-4 weeks), the prices may test that level. The further breakout above the AUD 2.22 with the higher volume may extend buying in the stocks till AUD 2.55.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~62 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 Vicinity Centres Ltd. is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Vicinity Centres is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. 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 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^thNovember 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.

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 December 07, 2020.

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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