Weekly Review U Stocks - 27th Oct 2023
Here is the weekly review figures and charts that I do every week. It is useful only for those interested in trading or those who hold multiple shares and based on performance would like to keep re-balancing as we go. As I have disclosed earlier I do hold a number of U stocks. This is the reason I include a number of other U Stocks in my analysis. In my figures, I also have performances of U stocks for 2021 and 2022 - for those interested in looking at longer term view.
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Please note that all my analysis are from a trading perspective looking at short-term view.
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There are no new additions this week, so my stock list contain 28 stocks.
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.How are we going in 2023 - General Markets
- SP 500 continued its down trend this week, losing another 100 points. Last week as well we lost around 100 points.
- We broke a key resistance of 4200 this week. Two key numbers being looked in - 4100, or somewhere between 4000/4050.
- If we go up, first key level identified now is 4250.
- We have lost over 10% from 4600 - so have met the criteria of correction of drop of over 10%
- Volatility Index VIX is over 21 - so we lost 20 which was significant for a bull market
- Markets are volatile, but somehow many bulls are still thinking we are testing some bottom before new highs
What will happen next week - General Markets:
- US markets had another drop on Friday, so a soft opening on Monday for us
- Seasonally they say we bottom in October. If seasonality is to play, we may do a bottom soon, maybe sometime this week
- Markets in a very critical and fragile state - next week may set the tone for couple of months, so very significant week coming up
- Some signs in crack of economy - Banks, Housing in US, China, Inflation and now Wars suddenly gripped fears in minds of many
- Next week - PMI, Jobs data, Interest rate Decision, Earnings Report - all these can provide direction
What are the chances of bottoming here?:
- Mixed opinion by analysts, some feel we continue to drop or crash, but many now believe we may bottom, possibly even this week.
- Reasons we may bottom, mainly due to divergence and support:
- This whole rally started from levels at 4110/4140 - which is where we are now. So many feel we are testing back the support and could reverse from here
- Divergence between VIX and SP 500 around higher/lower marks
- Divergence between Smart money and SP 500 - Smart money making higher low, SP 500 lower low
- Signs that 10 year may be topping
- Signs that Dollar Index may be topping
- Divergence between Fear and Greed and SP 500 - Fear and Greed made higher low when SP 500 made lower low
- Fear and Greed Sentiment Indicator at 24 - Extreme Fear - many times we bottom after reaching Extreme Fear
- My feel - Probability wise I feel we may be bottoming. But the way markets play where anything can happen, we should not assume it, rather wait for it to play out that way. At this stage I am playing for this bottom to happen in next week or two but will adjust as it evolves
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Personally: My situation is slightly different to last week. 20% U stocks, 35% Li, 5% rest short play, 40% cash. Decreased some U stocks which seem to be in consolidation and bought some Li stocks. As I have been writing in last few weeks I was playing very big one Li stock. I had cautioned that its market cap is high, is volatile etc but I had a gut feel something inside is going on and even though market cap was very high, I kept on playing it. I have been very lucky there as that stock made 70% gain this week. Now market is very high, but I feel it may still have some legs as there are not many AUS Li stocks which look like real deal, and I feel some leaders in industry who want to play ASX Li will step up and take positions for future. So still playing there, but please dyor. Also bought a few smaller Li stocks which tested their bottom this week - not big positions, initially trying to play 30/50%, unless some of them have an announcement which is game changer, in which case I will continue to hold. Also watching Li space intently as feel bottom may be there soon - have few in mind which I want to hold in case Li sector reverse. For U stocks, I want to see next stage of play. Huge gains have been made in last 2 months, at one stage 90% of my portfolio was U. I feel its consolidation now. I am looking for signs that it can make another 30/50% in next 4 to 6 weeks, so waiting for that feel that it is ready to come. Currently 40% cash I have kept to see if we see markets bottom here, then I will quickly buy back without being very choosy - its important to be in when the uptrend is there.
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Stock/Sector specific Info:
- We are still playing 4.6 to 5.9 zone. Made an attempt to dash to 5.9 by reaching 5.6, but slightly weak U sentiment meant the referee called it a false start and asked to get back to starting line
- U stocks were flat for this week - so three weeks in downturn, one week flat - so maybe turning and making short-term bottoms
- Most of the big stocks held up well, so although we didn't see next leg up, but holding the level for now
- U future gained $4 to reach $73 - very bullish but not enough to send U stocks to new high - may be need at least 80
- A lot of gain has happened in the sector, so a bit of consolidation, profit taking may be happening after the monster move. My gut feel is the vertical rise that we saw recently may be difficult to emulate, so it may be choppy, slow grind - there will be moments of euphoria which may be sold, but steady increase possible, subject to general markets as well - if they crash, then who knows. One of the reasons I am holding back on adding more U is because of general markets
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Here is the Figures for the Week:
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(20min delay)