What a disaster of a day
Yes, we nearly gave up the gains of yesterday. We dropped 4 pips to finish on 7.3c. Our VWAP was 7.64c, so finished well below that. Volume was medium, around 43m shares traded, similar to the zone we are having volume last week or so - 35 to 45m shares traded.
ASX U stocks also had a lacklustre date. The shares I track, average gain was between 1 to 2%. We lost around 5%.
US U stocks did well yesterday night. The dow was in green and ASX was also in green. The U futures made a new 10 year high of $51.6 after gaining $1.25 overnight. All positive indicators, yet we went down and other stocks struggled too.
So what really happened? I can think of few reasons -
- First, most stocks have had a healthy gain from just over a week back. Eg we were on 5.5c, BMN was on 18c (which finished today on 25c), PDN on 68.5 (finished on 86c today). Yes, just a week back. So there has been a gain of 30-40% in most stocks. I feel profit taking was rampant.
- Secondly, although U futures reached a new high, the real feeling and effects have not yet sinked in. It may take a few days to understand the gravity of this. Then we could see another surge.
- Thirdly, I still feel institutional investors have not yet got in. Retail are not able to hold for long. BOE made a good move but PDN is struggling. The institutions may be asking for more - we retail may be happy with Spot price. They want to see its affect. They will assess, and wait and once positive impacts confirmed, should get in. So a slight pause here.
Personally, I did sell my trading shares. Only for one reason. In my weekly report and in many other daily reports, I have been calling out that last 3 times we moved from 5s we reached - 8.1c, 8.4c and 8.1c. I was very wary about this. Although I have lot of shares which I have gone long and do not trade, I would have loved sp to go higher. But my trading side was telling me there is a chance it may stall again - sell, if it goes up, you can buy again and also your long shares would make money if it goes up. So I had half sell on 8, and when 8 didn't hold, sold rest on 7.8. So average 7.9. Incidentally this was the same average of 7.9c I sold in the last run as I mentioned previously in one of my reports. Looking to buy back now. Unless something dramatic happens, I think we will hold this level and I feel my buy will be early 7s. Lets see.
What next - Not sure how tomorrow will fare. We already had a green dow and ASX, so there could be a slight slip to red. Also, its Friday, which is not a good day for rises. On the other hand, it may happen that penny may drop around U spot price. Also, we are getting good news around U nearly every day. Lets hope we get another one tonight. There is a good chance punters may realise where we are now, and if that happens, after this small hiccup, we should be back on track. I have been wanting my number 7.8 to hold for so long (not just cross). Lets hope we see that soon. All the best.
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