Momentum Monday - 15th January

Welcome to Momentum Monday.

Though markets seem to be heating up - there has really been a dearth of company announcements. Expected to see more half year business / sales updates coming over the next few weeks as Accounting departments get out of their holiday mode. While the results are unknown, what we do know is that there will be plenty volatility (we hope)

Interesting links

• Weekend Watchlist with Shares for Beginners this week covered a minnow we discussed a few weeks back in SPZ Smart Parking. Listen here to the replay

• Chris is preparing a session for an introductory webinar to be held at 6:30pm on Wednesday for 30 minutes. This is on the back of Elio’s session last week on Thursday morning. Both sessions are for new users. We would be happy if you forwarded the invites/recordings to any interested party

• “Empower Others” referral program Learn more here

• Follow us on Social Media Facebook Linkedin Instagram or X (formerly Twitter) We recommence more of our media commitments this week, so stay tuned for new content shortly.

This week’s content is as follows:

• Broader market sentiment

• Member corner

• Stocks in the “Shine Zone” (including changes)

• Buses pulling out of the station (volume + price movers)

• 52 week high screen (including changes)

A reminder that you don’t have to read all this contribution. Simply scroll to the area of interest.

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Broader Market Sentiment

We look at the direction of both the US and ASX markets to gain an understanding of the broader sentiment at the minute. It is important to stress here that I DO NOT use this to time my entry or exit out of stocks. I prefer to use the individual charts of stocks to do that. However I find it useful in helping us determine how aggressive/cautious traders should be in their trading. In short the more positive the broader market is the more risks you can take and vice versa.

US / S&P500

While markets have been busy, we do get some respite on Monday as markets close for Martin Luther King Day. For the record, the S&P500 closed up for the week, and back at close to all-time high levels.

S&P500 Weekly chart

But it wasn't all clear sailing. On Friday we learnt the US Banks (who started releasing their quarterly results) were a little weak. Though to be fair their reports in many degrees were messy eg Citigroup produced a loss but it had many one off charges on account of laying off 10% of staff - and it went up.

There was also conflicting data which showed inflation had not yet completely disappeared. Whilst hardly a surprise, neither was Tesla with its cautious outlook on account of “Iran backed Yemeni Houthis” (In case you had any doubts) disrupting supply and a slowing down in China having an impacted price.

The farcical events at the SEC, having to retract a statement of Bitcoin ETFs approved via X (formerly Twitter) erroneously sent because of a “hack”, eventually saw them approve the instruments the next day, announced on another platform obviously. That said, Bitcoin has had a very good 12 months, and it was not a surprise to see this move (neither the retracement after the formal announcement).

In sum, being near all-time high levels, plus short term support at 4117, means we are in.

AUS S&P/ASX200

It was a bit of a nothing week here in Australia. The market didn't move much and is still close to resistance, though pleasingly we “just” finished up.

S&P/ASX200 Weekly chart

So I wish I could report a vastly different sentiment than last week, but I can't. Just to reiterate, I am happy…. But I still can't get the vision of our index sitting at near resistance out of my head. The fact of the matter is we remain in a sideways channel which has lasted two years. Despite the positive close, we did finish down at levels seen two weeks ago (that gives me heart as I want to see a pullback before we continue).

The biggest story from a commodity perspective was Iron Ore that fell again, this week quite heavily. Not good news for the big miners, the index (or the Government).

The other big local story was inflation which showed Australia ’s November consumer price indicator eased to 4.3 per cent in annual terms compared to 4.9 per cent in October. Analysts had forecast inflation to fall to 4.4 per cent. A pleasing outcome, but I don't know if that will be enough to save retailers who have all been cautious in the lead up to their half year results.

Last week I spoke of the travails for the Lithium sector. No such problems with Uranium with the cost of yellowcake rising to a 6 year high and subsequently the price of producers/explorers doing well. We even saw minnow PEN raise capital easily. A timely reminder that it's easy when the bulls are running with you.

This week I also point to the significant increase in stocks at 52 week highs and the Shine Zone. The former due to us trading where we are, the latter because more stocks saw their 50DMA cross above the 200DMA on account of the broader market sentiment. From a broader market perspective this was the second week the MACD closed negative but it is still supremely positive.

Therefore whilst there is no real change in my “optimistic but cautious” view, the Uranium story reminds us there is always something running… if you look hard enough. Either way, we are still in.

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Member corner

In this section we will provide a detailed chart assessment, on a maximum of ten stocks weekly, on companies from those of you in the Gallery.

We welcome stock requests to be analysed from members. We will also be looking at the charts of some of the more actively researched stocks for the week. We will try to rotate through a selection so as to not make the charts stale, however we will likely not cover a stock within 2 months of when it was last discussed.

If you want to see what has been written about a stock recently, go to the discussion area.

We will not be making up suggestions. If there are no changes to the most viewed list and/or there are no suggestions from members, then no stocks will be covered.

To learn of the methods used to analyse companies in this section, refer to my Momentum Journey series that I articulate here in three parts.

Episode 1

Episode 2

Episode 3

They will help provide context on what I am writing about and the editorial angle of this report.

Also look at the market capitalisation and liquidity before making any decisions!

And again, if you have a stock you would like analysed from a momentum perspective, please write it into the comments section below or email us at @stockopedia.com.au">support@stockopedia.com.au

ASX: CBA - Commonwealth Bank of Australia

• StockRank 80

• Momentum Rank 96

• QM Rank 84

• VM Rank 87

• A$113.63

A stock we have not discussed in a while from a momentum perspective is our premier bank Commonwealth Bank of Australia (ASX:CBA)

ASX:CBA 1 year Daily chart

At the time I said after it broke resistance at $109, “Be sure to set an appropriate parachute stop loss for yourself. Structurally, the level of $101.05 would be a level where a stop could be set to protect yourself from any consumer Armageddon.” The price actually fell below that structural level going to as low as $93 with a big gap for the dividend. But since then, the price has stabilised (a good sign) The cherry on the top has been the rebound since late October. There we have actually been 11 consecutive positive weeks for the stock. So in sum, I think it has run too hard for too long and will be due for a pullback.

There is not much to say about CBA that isn’t regularly said, other than I will reaffirm my view that unless you think downtown Pitt Street will one day resemble Mogadishu, then there is always a place for a bank in a well diversified portfolio. Of course CBA pays the lowest dividend, but it doesn't matter. It seems to be more in control of its outcomes than the others.

This of course however should not dissuade long term investors from the business. Its future is intimately linked to the economy so a position in CBA is a position on that. For traders I would have a short-term stop as a parachute stop given the fact it has broken through resistance again and is now at 52 week highs. Possibly somewhere near $106.00

ASX: NHC - New Hope

• StockRank 99

• Momentum Rank 92

• QM Rank 98

• VM Rank 99

• A$5.31

We last discussed New Hope (ASX:NHC) at the end of October. Read the commentary here.

ASX:NHC 1 year Daily chart

At the time we talked about the nice short term pattern that was forming. Though we warned, “A traders stop loss from here would likely be $5.87. A more medium term investor who likes the business could be more forgiving at $5.23.” At this point both levels have been breached, indicating that the return to favour was a miss.

The breakdown has actually created a new scenario where medium and short term support are now both found at $4.50 - $4.58. If I was going to acquire some I would wait for the price to [ull back closer to this range. Alternatively if this is the floor, I wouldn’t look at the stock again until it sustainably crosses above $5.87 again, which was the past short term support level.

ASX: PDN - Paladin Energy

• StockRank 65

• Momentum Rank 99

• QM Rank 81

• VM Rank 72

• A$1.205

With Uranium prices doing so well at the minute was it any wonder that Paladin Energy (ASX:PDN) would make it on this list. It is our only real producer at the minute listed on the exchange (BOE will be/is second). Although surprisingly this is the first time we cover the company in this forum.

ASX:PDN 1 year Daily chart

Is it any wonder for this Australian based Namibia miner? There are few things to like. The series or recent high highs is a positive, as is the fact the company is trading at 52 week highs. Even better the stock has not been this high since the early 2010’s so it has had a decade to rebase and start again. Even the recent short-term run found significant support at around $0.92. Holding this level was a good catalyst for another run.

As a price taker, obviously the boon in Uranium prices have seen this stock go up as it realises the benefit of increased prices straight away. But as is always the case, once price runs the level of production increases (Take BOE and Lithium/REE stocks as an example).

I do like charts that look like this as a general rule. If I was to consider a position now I would hope for a better entry level. While I think $0.92 is behind us at the minute, looking at $1.05 or a little higher may be appropriate.

But it is Uranium, its Africa (though a good jurisdiction) and it is around $1 - Moral of the story is, this stock can swing. At least it is at the upper end rather than the lower end.

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Stocks in the Shine Zone

To learn about the Shine Zone and how to use it, you can read it here.

The rules for inclusion in this list are based on those I like to see in a stock before considering a trade in it:

• QM Rank above 80

• Price is above the 2.5x ATR

• 50d MA is above the 200d MA

• Price is greater than the 200d MA

• Market cap greater than $200M

This is a very important point: the “Shine Zone” are rules for possible buying. They are not for holding and/or selling. If a stock falls out of the shine zone, use support levels to set your stops, or instigate a parachute stop if necessary. With markets moving sideways, one expects frequent changes in these lists.

If you feel there is a stock that should be included but is missing please let us know. This is a manual process and occasionally one gets through the cracks

Also look at the market capitalisation and liquidity before making any decisions!

Data is at 13 January and is sorted by the stock code.

Changes from last week

Shine Zone list as at 13 January

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“Bus pulling out of the station”

To learn more about this screen read the following article on the objective of the screen

Here is a shortcut in understanding the reasons why a stock is removed:

• Volume drop = Bus might be moving, but no one is on it

• Price 1 mth < 0% = Bus has been cancelled

• Price 3mths >= 3% = Bus has pulled out of the station

Also look at the market capitalisation and liquidity before making any decisions!

Data is at 13 January and is sorted by the stock code.

Changes from last week

“Pulling out of the station” on 13 January

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52 week high screen

In this section we identify stocks within 5% of their 52 week intraday high based on the idea, supported by academic studies, that stocks close to their 52 week highs tend to outperform. Weekly changes to the list will also be noted.

If you wish to recreate this screen in the screener select "Price vs 52 high" greater than -5% and Mkt Cap greater than $200M

A stock coming onto the list is NOT an automatic buy, just as a stock that leaves the list is NOT an automatic sell. As with the shine list, assess every chart on its merits. However movements on this list may alert you to interesting charts so be sure to look at Stockopedia and the chart first.

Data is at 13 January and is sorted by the stocks closest to their 52 week intraday high.

Also look at the market capitalisation and liquidity before making any decisions!

And remember, past performance is no guarantee of future performance.

Changes from last week

Stocks within 5% of their 52 week high as at 13 January

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