Momentum Monday 29th January

Welcome to Momentum Monday.

I know it’s been a while since we have had you share with others the value of Stockopedia. Feb 1 makes a big day as the price of the service rises $100 pa, for $475 to $575. This includes Chris and my time and on a portfolio of $200k, that is a fee of 0.24% per annum with all the trimmings attached. Come Feb 1 that increases to the equivalent of 0.29% - which still makes us the best value in the world AND its risk free!

So if you haven’t yet you have a few days to sign someone up because if they take the free trial, the lower price will be locked in. And if you're wondering you should stay on because of the extra cost - to be frank I will not humour such prosperous thoughts.

It was a shortened week domestically so we could complete our Australian commentary sooner. At the moment things and policies are changing quickly…. But who cares right? We are near record levels!

Interesting links

• Weekend Watchlist with Shares for Beginners this week covered a stock discussed with members a few months ago in light of the Nanosonics risks'. It is CUV Clinuvel Pharmaceuticals. Listen here to the replay

• Our last webinar before the price for non-members was held on Wednesday covering the NAPS portfolio you received a month ago. There was quite a big audience, however if you feel someone needs to watch it so as they can convince themselves why saving on a small steak dinner for one is worth it for the future prosperity of their families Listen here

• “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

It was another positive week for the S&P500, though at least Friday broke a six day winning streak. It needed that.

S&P500 Weekly chart

But nonetheless, it was the third up week in a row and records keep getting set.

Looking at the mix of what is running, we can see the NASDAQ 100 outrunning the Dow. But I find it more interesting that within the NASDAQ, the big guys are doing better than the Composite list (NASDAQ100 outperforming NASDAQ Composite… especially in the last 12 months)

Coincidentally, the NASDAQ has unsurprisingly done better than the S&P500.

Back to the broader index, and quarterly earnings season continues in earnest, and with the exception of the high profile problems at Tesla, everyone else is doing AOK so the index melting up is no surprise.

During the week GDP came in higher than expected, and the Personal Consumption Index came inline so it's hard to fault the performance of the world’s largest market at the minute.

The only thing I will add (for keen watchers of the chart above) is that I am tempted to lift the short term short level for the index from 4117 to 4589. To be honest it feels like I am moving it so that I can do something. But it corresponds to the high at the end of July (and is not over 20% from current levels). That said, I do not see this as a “key” but it is one nonetheless.

I still remain in equities globally.

AUS S&P/ASX200

Yawn … sorry was that out loud? I meant to say we are still in the sideways pattern, though pleasingly we are at the top of the range rather than the bottom.

S&P/ASX200 Weekly chart

Pleasingly it was a positive shortened week for our market, though one could argue with the positive close on Thursday/Friday for the S&P500, it could have been better. But one never ignores a 1.7% rise for the week and it was pleasing to see Materials find some love after what had been a tough few weeks, particularly in the battery metals space.

The broader index though paints a picture of calm, amidst a ripping under current, no better exemplified by Nanosonics and Dominos Pizza. NAN experienced a false break so I was stop[ped out of that. But in the case of Dominos it was in recovery but disappointed so I got hit. I will now wait for an elegant exit (unless it opens down on Monday and I jump out.) At the time before the falls, both stocks had a QM above 80 (obviously that is less now)_. Notice how I seem nonplussed? I could focus on DMP’s code and name. Read the Don Meji back story. Understand where all their stores are located and what levers the company has to pull to get things back on track - or I can just cut and move on. As a DIY investor, I choose the latter. So with a QM Rank now of 55 and trading at 52 week lows, I have saved myself days, if not weeks of work which is quite liberating and reminds me why Stockopedia is value packed as a service. (Note: I charge $795 per hour for my personalised service so you can do the math.)

So what is it like beneath the surface? While not exact, the ASX Small Ordinaries measures the Top 300 - the ASX100, and if we look at the chart it paints a different story. We are still well off our highs of 2021, and we continue to remain in a sideways channel since early 2022.

S&P/ASX Small Ordinaries 2 year Weekly chart

The pattern looks similar to the larger indicator except for the fact that we are not as close to all time highs. You will notice I have updated the chart and can clearly see on a weekly basis, we can’t get as interested in small caps until a cross of the LL occurs at 3050.4. The two bounces off support in Sep 22 and Oct 23 are pleasing. We just need some oomph!

But this chart will go a long way to explaining to those of you who steer clear of large caps why things might be a little challenging now. For old Stock Dogs like me, if I was to scratch even further, I shudder to think what the index would look like for even smaller stocks. Dare I suggest it would be much worse than this.

Back to the market, it was pleasing to see the RSI replicate the solid week, and the MACD lines continue to rise. However note, the bar charts which measure the gap between the two moving averages fell again. Basically because the high of this week is not as high as what it was a Christmas, but at least it is moving the right way.

S&P/ASX200 RSI and MACD Since Nov 23 Weekly chart

The other thing to note is the nice amount of new stocks entering and exiting the Shine Zone and the 52 week high list. This is symptomatic of a market behaving just like we want it to.

So I remain in equities locally and there are obvious pockets of both outperformance and underperformance. In this instance large caps are winning.

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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: MIN - Mineral Resources

• StockRank 69

• Momentum Rank 50

• QM Rank 74

• VM Rank 54

• A$59.39

While quite a few of the recently viewed stocks had been analysed within the last 2 months, one company that requires a revisit is Mineral Resources (ASX:MIN)

ASX:MIN 1 year Daily chart

At the time of writing in October, we said MIN was in a well established downtrend. That has not changed. Like many stocks in the sector it tried to stage a mini rally to the end of 2023. But with Spodumene prices collapsing and commodity prices seeing weakness, this weighed on the stock and it has continued to fall. So much so it has created a new higher low, and new lower low.

At the time of writing I said "I hope" it doesn’t hit my bearish target of $42, but with a new closing low of $52.55, it is still in play. I said that a break out of $64 was necessary before we could even look at it. It did that. But even if you were waiting for the inevitable pullback it failed to hold and therefore continues to be an avoid. (And it didn’t get above $73.90)

Again, I wouldn’t look at it from a trade perspective until it crosses back above $64, and again, there is A LOT of work to do. Despite the “bounce” on Thursday, the stock’s 50 day moving average is below the 200D average, and the price is below both.

ASX: YAL - Yancoal Australia

• StockRank 99

• Momentum Rank 91

• QM Rank 96

• VM Rank 99

• A$5.82

We’ve discussed coal stocks (a lot) in this forum. But one company that until now has avoided the MM eye has been Yancoal Australia (ASX:YAL) .

ASX:YAL 1 year Daily chart

Without knowing specifics, I dare suggest it is because of the 62.3% ownership by Yankuang Energy Group who even made a low ball offer for the company back then. Interestingly the offer was lower than what the price is now. Then there is the Hang Seng listing and Chairman resigning.

But since that was thrown out the Yankuang alliance has remained strong and the company has held up relatively well. They were interested in the two Queensland Coking assets (But lost out to WHC - Whitehaven Coal). To be fair they were once one of our more indebted companies. But now they spit out out more cash than they can handle and the price has recovered into the new year.

As a rule such heavily linked/owned businesses I steer clear of from a Momentum perspective. But looking at the chart I can see why it interests members. The stock has started a new short term higher high. The 50D moving average has just crossed above the 200D moving average and the ATR is in the right spot.

For those that have read this column long enough, you will know I wait for a mild pullback (staying above $4.80 from here.) If it does that and holds a position may be considered and the upside target will be the range of $6.95 where that is the previous all time high back in late 2022.

ASX: DMP - Dominos Pizza

• StockRank 49

• Momentum Rank 23

• QM Rank 55

• VM Rank 22

• A$39.51

Unsurprising that after a tough end to the shortened week that Domino's Pizza Enterprises (ASX:DMP) appeared on the list of stocks members were searching.

ASX:DMP 1 year Daily chart

So as I mentioned in the S&P/ASX200 introduction, I was trying to be a clever dickie here…. But fell on my face. Let me explain what I was thinking.

Back in February last year you will see the price gaped down quite aggressively. As the old saying goes, “Gaps over time get filled” so immediately the stock went on alert. You will notice the price bounced along the bottom until the middle of last year when it hit what was at that time was a lower low, and then started to rebound (no, I didn’t pick the bottom!)

You can see the annual report showed an apparent end to the bleeding (though it wasn’t great) and the price jumped. At that point I looked for an entry close to $52. The price continued to rally creating a series of very short term higher highs and higher lows. My theory was when the price closes the gap above $70, I’ll be out.

I even started feeling cock-a-hoot when at the Annual General Meeting the tone was optimistic and things seemed to improve. What could go wrong? Then Thursday came and the stock is now at 52 week lows.

I have made my decision. I move on (likely on Monday.)

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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 27 January and is sorted by the stock code.

Changes from last week

Shine Zone list as at 27 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 27 January and is sorted by the stock code.

Changes from last week

“Pulling out of the station” on 27 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 27 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 27 January

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Information in this commentary is current as at date prepared unless otherwise stated. However, please bear in mind that investments can go up or down in value, and that past performance is not a reliable indicator of future performance. For more Important Information please refer to the Disclaimer section of this website.

This communication may contain general financial product advice. It has been prepared without taking into account your personal circumstances, and you should therefore consider its appropriateness in light of your objectives, financial circumstances and needs before acting on it.

If our advice relates to the acquisition or possible acquisition of a particular financial product, you should obtain a copy of and consider the Product Disclosure Statement (PDS) before making any decision.

The author holds interests in MIN and DMP companies listed in the data tables . This position can and will change at any time without notice.