Momentum Monday 20 November

Welcome to Momentum Monday.

It's amazing how much the media coverage and expert commentary has changed over the past month.

Turning from Black to White seems an understatement. And yet, we haven’t moved much. At least that keeps the mind active, but a publication like this keeps the sanity in check. Just one of the services we are proud to provide you with at Stockopedia.

Not market related, though congratulations to the Australian Cricket team. As I am sleep deprived this morning - I at least had to get that out!

Interesting links

• Weekend Watchlist with Shares for Beginners Listen here This week it is JLG - Johns Lyng Group

• Excellent webinar hosted by Ed Croft on identifying potential 10 baggers. YOU MUST WATCH THIS! View here There will be more work that comes out of this. This is the first of a series to be produced exclusively for subscribers. Obviously UK examples are referred to but the principles are enduring!

• You can watch a recording of our Dividend Webinar with the ASA (assuming you are an ASA member). Access it via the ASA website via the webinar library

• “Empower Others” referral program Learn more here

• Follow us on Social Media Facebook Linkedin Instagram or X (formerly Twitter)

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

The third weekly gain for the S&P500 rising 2.2% for the week continuing the recent rebound off support.

S&P500 Weekly chart

We are fast approaching the short term target of 4582. As mentioned last week, it would be nice just to see the index creep above that level just to set the low of October as a new higher low.

So what are the probable moves now?

In my view, the upside target is the all-time high of 4766. This will only occur if the low in October holds.

For the last few weeks I have been writing consistently that if it wasn’t for the macro noise we were hearing, that the chart was looking strong and I continue to feel that way.

The week was likely going to finish positive following US Inflation numbers which showed a distinct stabilisation. In October CPI was 3.2% which was the same as twelve months ago. While the rhetoric is that inflation still needs to ease, bets are that there will not be a rate rise before the end of the Calendar Year, a traditionally important time for the consumer.

Further supporting this, oil price weakness on the back of stockpile increases further eases the pressure leading into the Northern Hemisphere Winter, though OPEC has effectively said it will not extend production cuts well into 2024.

Other pleasing signs include:

• The index has smashed out of the downward channel we have spoken of for the last few weeks.

• RSI has been above 50 for the last 3 weeks and;

• While the histogram of the MACD is negative, It has been improving and the two moving averages are converging

We remain in equities globally.

AUS S&P/ASX200

Despite the negative close on Friday, our market still finished up for the week, though frustratingly still within the support zone. So we can’t turn our backs just yet.

S&P/ASX200 Weekly chart

Nonetheless, the move was pleasing to see as it keeps us well away from the 6474 support level.

While our move was not as aggressive as the US, experienced traders will know this is nothing unusual and the best we can hope for is we catch up to them in time. Hopefully it will be on a rising tide, rather than them coming back to us. The positive feel in the US chart gives us hope, especially as ours frustratingly doesn’t look as strong.

Thinking of half glass full, perhaps it is their strength that is keeping us above water for the minute? After all, we did create a new short term lower just 4 weeks ago. Half glass empty though reminds us our market has done nothing for two and a half years.

Pleasingly though the stabilisation this week has seen a significant increase in stocks in the Shine Zone. Fingers crossed this broader rebound may be sustainable.

We finish this week the same as last, and to be honest, it’s not a bad way to think all the time, “Remain focused on good looking charts…. And if it looks hard, look elsewhere.”

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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 e will likely not cover a stock within 2 months of when t 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.

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 support@stockopedia.com.au

ASX: ANZ - ANZ Group

• StockRank 85

• Momentum Rank 87

• QM Rank 76

• VM Rank 96

• A$24.07

After reporting during the week, it was unsurprising to ANZ group (ASX:ANZ)  amongst the most reviewed stocks by members at a point during the week.

ASX:ANZ 1 year Daily chart

Before we start looking at the recent price action it’s important that we take a step back and look at the chart from a long term perspective.

Below is the 5 year chart. Following the COVID blip, the price has recovered and gone sideways since, therefore any view on short term moves is built around the potential of the stock no longer going sideways.

ASX:ANZ 5 year Weekly chart

So what level is that?

Over the short term, there is no point looking at the stock as an entry until it crosses back above $26. Strong resistance was felt there in October last year, and in February, July,September, October and November. What I am trying to say is that we have a strong level of resistance here, and until that is broken and subsequently consolidated, we look limited on the upside.

On the downside there are a few more levels to watch…

In the short term it needs to hold the range of $22.50 - $22.60 if it is going to have a chance of retesting the $26.00 mark.

Failing that, the next downside target becomes $20.90. Failing that $17.24. All those levels would be appropriate stop losses depending at what price you enter.

If you bought ANZ in the $3s back in 1993, ignore everything I have just written.

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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

Data is at 18 November and is sorted by the stock code.

Changes from last week

Shine Zone list as at 18 November

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“Bus pulling out of the station”

This section was introduced recently.

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

Please let us know any feedback

Data is at 18 November and is sorted by the stock code.

Changes from last week

“Pulling out of the station” on 18 November

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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 18 November and is sorted by the stocks closest to their 52 week intraday high.

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

Changes from last week

Stocks within 5% of their 52 week high as at November 18, 2023

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