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

Last week, ASX All-Ordinaries Index (.AORD) recorded its fourth consecutive negative weekly closing amid concerns of rising new COVID-19 variant. .AORD settled at ~7543.60 with a decline of 0.74% for the week ending December 03, 2021. Overall, the ASX markets are trading in a weak bias after the broad index broke the ascending channel pattern by downside on a weekly chart. ASX indices took negative cues from the weak Building approvals data. According to the Australian Bureau of Statistics (ABS), the total number of dwellings approved decreased in October 2021 by -12.9% to 15,911 from 18,266 dwellings approved in September 2021.    

As per the technical indicators, prices are now trading between its 21-period SMA and 50-period SMA and finding its next resistance level at 7690.43. The upcoming macro events that may impact the market sentiments include an update on Australian House Price Index, JOLTS Job Openings data, US Unemployment Claims and US Consumer Price Index released Monthly.

Global Markets Wrap-Up 

Wall Street indices closed on a negative note last week. S&P 500 settled at 4538.43 with a loss of ~1.22% while NASDAQ Composite Index also settled in red zone at 15,085.47 with a loss of ~2.62% for the week ending December 03, 2021. Meanwhile, US indices decreased last week amid increased US unemployment claims data. The seasonally adjusted initial US unemployment claims data published by the US Department of Labor, increased by 28k to 222k for the week ending 27^th November 2021 against the revised unemployment claims at 194k in 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 stocks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Origin Energy Ltd. (ASX: ORG) and MAAS Group Holdings Ltd. (ASX: MGH) for the next 2-4 weeks’ duration: -

Origin Energy Ltd. 

Origin Energy Ltd. (ASX: ORG) is an Australia based leading energy company. The company is in the business of the sale of electricity, natural gas, LPG, and green power products to Australian houses. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

On the weekly chart, ORG stock price broke the downward sloping trend line by an upside and the prices are sustaining above the same from past three weeks. Now the next immediate resistance level appears at AUD 5.900 and in the short-term (2-4 weeks), prices may test the level. An upside above AUD 5.900 level supported by volume may extend buying in the stock till AUD 6.750 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is hovering at ~54.05 level indicating positive price momentum. The CMP is trading above the 21 period SMA and 50-period SMA that indicates bullish trend for the stock. Volume analysis is showing positive signal for the stock prices.

Financial Summary: 

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Origin Energy Ltd. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investor’s appetite for 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:

MAAS Group Holdings Ltd. 

MAAS Group Holdings Ltd. (ASX: MGH) is a diversified business group. The company business segment includes construction materials, equipment, real estate segments. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

On the weekly chart, MGH stock price broke the downward sloping trend line by upside and the prices are sustaining above the breakout level from past two weeks. Prices recently took sharp upside movement with the support of good volumes that further indicates bullishness in the prices. Now, the prices are heading towards its next resistance level that appears to be at AUD 5.520, and the stock may test that level in the short term (2-4 weeks). 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the momentum indicator RSI (14-period) is hovering at ~54.51 levels indicating bullish momentum for the stock. Also, the prices are trading above its 21-period SMA and 50-period SMA that is also supportive for the stock. Volume analysis is showing positive sign for the stock.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that MAAS Group Holdings Ltd. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investor’s appetite for 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 in the ‘Entry Price’ can be considered depending upon the upside potential expected and taking into consideration the Target 1 and trailing stop-loss levels indicated. For example: - An Investor can consider entering the stock at or above a certain range (3%-5%) from the Entry Levels recommended depending upon the potential upside expected and difference from the Target 1 and Trailing-Stop Loss Levels indicated for the stock.

Note 1: Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above.

Note 2: 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.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest. 

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

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 December 06, 2021. The reference data in this report has been partly sourced from REFINITIV. 

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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