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

ASX All-Ordinaries Index (.AORD) prices are holding ground near all-time high levels of 7419.80 and settled in a positive zone at 7265.30 with a gain of ~0.36 percent for the week ending May 21, 2021. ASX indices were supported by the lower US unemployment data. On domestic front, markets took positive cues from lower the unemployment rate recorded as 5.5% in April 2021 from 5.7% last month, according to the data published by Australian Bureau of Statistics (ABS). However, the total number of employed people  also declined to 13,040,400 in April 2021 compared to 13,071,000 employed in March 2021. Meanwhile, .AORD started this week on a bullish tone taking cues from the global markets, while basic material stocks are providing the support  considering an upside rally in precious metal and base metals prices.

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 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 Construction Work Done, Private Capital Expenditure and US GDP, 1^st Quarter 2021 (Second Estimate) released quarterly.

Global Markets Wrap-Up 

Wall Street witnessed mixed sentiments last week as S&P 500 settled at 4155.85 with a loss of ~0.43 percent while NASDAQ Composite Index settled at 13,470.99 with a gain of ~0.31 percent for the week ending May 21, 2021. US indices are currently settling at higher levels due to back-to-back decline in US weekly unemployment claims as per the data published by the US Labor Department that have further declined last week to 444,000 (lowest level since March 14, 2020) from 478,000 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 Jervois Mining Ltd. (ASX: JRV) and Praemium Ltd. (ASX: PPS) for the next 2-4 weeks’ duration: -

Jervois Mining Ltd. 

Jervois Mining Ltd (ASX: JRV) is an Australian mining and exploration company. The Company’s project portfolio includes the Idaho cobalt project, Kilembe project, Nico Young project and Bujagali project. The summary of stock’s key price indicators is provided below: -

Price Action Analysis (on the Weekly Chart)

JRV’s stock price has broken out of its falling wedge pattern at AUD 0.496 level on the weekly chart (on 20 May 2021). After consolidating for more than four months in the channel pattern, the price registered a decisive breakout. The stock price is trading above an upward sloping trend line support zone at AUD 0.42 level. Now the next immediate resistance level appears at AUD 0.65 and in the short-term (2-4 weeks), prices may test that level. An upside above AUD 0.65 level accompanied by volumes may extend buying in the stock till AUD 0.73 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is hovering at ~63.29 levels indicating positive price movement. The CMP is trading above 21 and 50 period SMA which is supportive for the stock prices. The increasing trend in the volume analysis indicates active buying in the stock.

Financial Summary: 

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

General Recommendation:

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

Praemium Ltd. 

Praemium Limited (ASX: PPS) is a software company having offices in Australia, the United Kingdom, Jersey, Armenia and Hong Kong. The company provides financial technology tools such as investment platforms, client relationship management (CRM) solutions, financial planning tools, etc. to the wealth management industry. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

PPS’ prices are trading above an upward sloping trend line from the last few weeks. Stock prices are witnessing golden crossover of 21 period SMA over 50 period SMA which further indicates the existing price trend is bullish. Now the next immediate resistance levels appear at AUD 1.02 and AUD 1.14 and prices may test that level in the coming period.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI has moved up to ~65.20 levels indicating a bullish price momentum in the stock. The CMP is trading above the 21 period and 50 period SMA which indicates the positive trend for the stock. Volumes are showing an increasing trend which indicates active buying participation in the stock.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Praemium 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: 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 May 24, 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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