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

Last week, ASX All-Ordinaries Index (.AORD) managed to post positive weekly closing despite of concerns of increasing COVID-19 cases in the AU region. All-Ordinaries Index (.AORD) settled at 7587.10 with a marginal gain of ~0.11 percent for the week ending July 02, 2021. ASX index prices start this week on a positive tone taking cues from strong rally in US markets in the latter half of the week. On domestic front, markets are also getting support of the Goods and Trade Balance data published by Australian Bureau of Statistics (ABS). According to the data, the seasonally adjusted balance of good and services increased by $1,524 million to $9,681 million in May 2021. 

ASX All-Ordinaries Index is trading in a rising wedge pattern on a weekly chart and prices are showing stiff resistance at the upper band of the pattern. Overall domestic markets are trading in a bullish zone mainly led by Energy, Utilities and Technology stocks which are currently among the trending sectors.

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 an all-time high level of 7289.7 level on a weekly chart and prices might be heading towards its next resistance level of 7714 level. The upcoming macro events that may impact the market sentiments include an update on The RBA Rate Statement, FOMC Meeting Minutes, and US Unemployment Claims released weekly.   

Global Markets Wrap-Up 

Wall Street indices continued its bullish run and traded at all-time high levels last week with S&P 500 hitting the record levels of ~4355.43 and settled at 4352.34 with the strong weekly gain of ~1.67 percent while NASDAQ Composite Index also settled at a record high of ~14,639.33 with a gain of ~1.94 percent for the week ending July 02, 2021.  The seasonally adjusted initial US unemployment claims data decreased by 51,000 to 364,000 for the week ending 26th June 2021 against the initial claims at 415,000 in the prior week supported the bullish 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 stocks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Coronado Global Resources Ltd. (ASX: CRN) and Booktopia Group Ltd. (ASX: BKG) for the next 2-4 weeks’ duration: -

Coronado Global Resources Ltd. 

Coronado Global Resources Ltd. (ASX: CRN) is an Australia-based material company engaged in production, marketing and exports a range of metallurgical coals. The summary of stock’s key price indicators is provided below: -

Price Action Analysis (on the Weekly Chart)

On the weekly chart, CRN stock price broke out the downward sloping trend line resistance at AUD 0.862 level on July 02, 2021. Since the breakout, prices are sustaining above the downward sloping trend line. Now the next immediate resistance level appears at AUD 1.08 and in the short-term (2-4 weeks), prices may test the level. An upside above AUD 1.08 level supported by volume may extend buying in the stock till AUD 1.24 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trying to move up from the lower levels and trading at ~52.85 levels indicating positive price momentum. The CMP is trading above the 21 and 50 period SMA which is positive for the stock prices. Volume analysis are showing positive signs for the stock prices.

Financial Summary: 

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

General Recommendation:

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

Booktopia Group Ltd. 

Booktopia Group Limited (ASX: BKG) is an Australia-based online book retail company. The Company also engaged in selling eBooks, audiobooks, digital versatile discs (DVD), maps, magazines, puzzles, stationery, etc. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

On the weekly chart, BKG stock price was trading in a symmetrical triangle pattern and recently broke the pattern by upside supported by volumes indicating further upside potential in the stock. Now, the next resistance level appears to be at AUD 3.10, and the stock may test that level in the short term (2-4 weeks). 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI has moved up to ~52.21 levels from lower levels indicating positive price momentum. The CMP is trading above the 21-period SMA indicating bullishness in the stock prices. Volumes are showing increasing trend along with price rise indicating active participation in the stock.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Booktopia Group 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 1: Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above.

Note 2: 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.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest. 

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

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 July 05, 2021. The reference data in this report has been partly sourced from REFINITIV. 

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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