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

Last week, ASX All-Ordinaries Index (.AORD) gave second consecutive weekly closing in a negative zone and settled at 7064.00 with a decrease of ~0.24 percent for the week ending February 19, 2021. Mixed domestic events and moderate weakness in global indices last week created ambiguity in the markets. Meanwhile, the Australian monthly job data released by the Australian Bureau of Statistics (ABS) gave positive signs. Notably, employment in Australia increased by 29,100 (0.2%) to 12,939,900 in January 2021 compared to 12,910,800 in December 2020. However, the Australian January retail sales data released in the latter half of the week posted a 0.6% gain which was weaker than an expectation of 2% rise partially offsetting any positive impact from the bullish Australian job data.

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 is getting an immediate resistance at 7290 level on a weekly chart that is near to the index's recent high level.

Prices are moving steadily upward, and the index may test its 52-week high in the coming weeks considering improving Australian GDP and growing employment rate. The upcoming data events that may impact the market sentiments include an update on Trade Balance, Australian Private Capital Expenditure, and Australian Private Sector Credit released monthly.

Global Markets Wrap-Up 

Wall Street witnessed moderate weekly losses last week. S&P 500 slipped from its new 52-week high and settled at 3906.71 with an overall loss of ~0.71 percent while NASDAQ Composite Index settled at 13,874.46 with an overall loss of ~1.57 percent for the week ending February 19, 2021.

Global Indices declined last week due to an unexpected increase in US jobless claims data from the Labor Department of the US. The US claims for jobless benefits increased last week by 13,000 to 861,000 from 848,000 the 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 stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Wisr Ltd. (ASX: WZR) and First Graphene Ltd. (ASX: FGR) for the next 2-4 weeks duration.

Wisr Ltd. 

Wisr Limited (ASX: WZR), formerly known as DirectMoney Limited is a financial services company engaged in providing personal loans through its online lending platform to Australian consumers. It is engaged in writing unsecured personal loans for 3 to 5 years maturities.

Price Action Analysis (on the Weekly Chart)

WZR's prices broke the downward trendline by upside on February 05, 2021 and are sustaining above the same from the past 3 weeks. Now the next resistance level appears to be at AUD 0.275 and in the short term (2-4 weeks), prices may test that level. Any further breakout above AUD 0.275 might take the stock prices up to 0.34 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~50 levels, indicating a positive trend in the stock. The volume is showing an increasing trend along with stock’s price action and indicates the bullish trend. The CMP is above the 50-period SMA but trading below 21-period SMA which are acting as an immediate support and resistance levels, respectively.

Financial Summary: 

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

General Recommendation:

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

First Graphene Ltd. 

First Graphene Limited (ASX: FGR), formerly known as First Graphite Limited is a mineral exploration company. It holds 13 exploration licenses over 39,500 hectares together and produces and develops high technology graphene materials across Australia and Sri Lanka. Below are the key price indicators for the stock: 

Price Action Analysis (on the Weekly Chart)

FGR’s prices are moving in an upward trading trajectory. Prices are currently taking continuous support from the upward trend line supported by volumes. Stock prices is now approaching the next resistance level of AUD 0.35 and for the short term (2-4 weeks), we can expect upside movement in it. Any further breakout above the AUD 0.35 accompanied by volume may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~56 levels indicating a bullish momentum in the prices. The increasing volume trend along with an increase in the stock’s price action further indicates the bullish trend. The CMP is above the 21-period SMA and 50-period SMA, further providing strength to the prices.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that First Graphene 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 February 22, 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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