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

ASX All-Ordinaries Index (.AORD) is consolidating at higher levels and gave negative closing last week  and settled at 7545.30 with a decline of ~0.55 percent for the week ending July 09, 2021. ASX index prices dropped slightly impacted by weak month-on-month building approvals data. As per the Australian Bureau of Statistics, the seasonally adjusted estimate for the total number of dwellings approved fell by 7.1% to 20,163 in May 2021 compared to 21,694 approved dwellings a month earlier. 

.AORD is trading in a rising channel pattern on a weekly chart and prices are showing stiff resistance at the upper band of the pattern. Overall, the domestic markets are trading in a bullish zone mainly led by Energy, Utilities, and Technology stocks.

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 recently broke an all-time high level of 7289.7 level on a weekly chart and prices might be heading towards its next resistance level of 7714 level. The upcoming macro events that may impact the market sentiments include an update on Westpac Consumer Sentiments, Australian data on Employment Change, and US Unemployment Claims released weekly.

Global Markets Wrap-Up 

Wall Street indices are consistently making new highs with S&P 500 hitting the record levels of ~4371.60 and settled at 4369.55 with a positive weekly gain of ~0.40% while NASDAQ Composite Index also closed at 14701.92 with a gain of ~0.43% for the week ending July 09, 2021. Markets took support from the positive Job opening, and Labor Turnover Survey data published by the US Bureau of Labor Statistics citing the number of job openings were slightly up to 9.21 million in May 2021 compared with 9.19 million in April 2021.   

Meanwhile, the seasonally adjusted initial US unemployment claims data increased slightly by 2,000 to 373,000 for the week ending 3rd July 2021 against the initial claims at 371,000 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 Suncorp Group Ltd. (ASX: SUN) and AGL Energy Ltd. (ASX: AGL) for the next 2-4 weeks’ duration:-

Suncorp Group Ltd. 

Suncorp Group Ltd (ASX: SUN) is an Australia-based financial services provider company. The company operates in Banking & Wealth, Insurance, and Suncorp New Zealand and offer services in Australia and New Zealand. The summary of stock’s key price indicators is provided below: -

Price Action Analysis (on the Weekly Chart)

On the weekly chart, SUN’s prices broke the symmetrical triangle pattern by an upside. Prices are now sustaining above the breakout level from the past 6 weeks. Now the next immediate resistance level appears at AUD 13.13 and in the short-term (2-4 weeks), prices may test the level. An upside above AUD 13.130 level supported by volume may extend buying in the stock till AUD 14.150 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is hovering at ~61.42 level indicating positive price momentum. The CMP is trading above the 21 and 50 period SMA which is positive for the stock prices. Volume analysis are also showing positive signs.

Financial Summary: 

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

General Recommendation:

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

AGL Energy Limited

AGL Energy Limited (ASX: AGL) operates Australia’s largest private electricity generation portfolio and has an operating generation capacity of 11,208 MW. It supplies 4.2 million energy and telecommunications services to its customers across Australia. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

AGL stock prices have declined sharply and recently made a new 52-week low level i.e. AUD 7.965 on May 19, 2021. After some consolidation in prices  at lower levels and the stock prices recently broke the downward sloping trend line by an upside. A positive RSI divergence with prices can be seen on a weekly chart that clearly indicates the prices could reverse from lower levels in the coming sessions. Now, the next resistance level appears to be at AUD 9.43, 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 has come down to an oversold region at ~30.39 levels indicating buying could be witnessed any time soon from the supporting levels.  However, the CMP is trading below the 21-period and 50-period SMA acting as a resistance level for the stock prices.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis,  we can conclude that AGL 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 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 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 July 12, 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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