Weekly Review U Stocks - 19th Jul 2024
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 last year - 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 contains 33 stocks.
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How are we going in 2024 - General Market
- SP 500 first real test coming, not for weeks, but for months it was rising in a straight line, now after long time 3 red days. From a weekly perspective moved from 5615 to 5505, so lost just over 2%, which is not big in scheme of things. Question is whether this is correction 10/20% drop, or pullback 2/5% - so something to watch
- Volatility Index VIX is at 16.52, first big sign that markets may go into correction, even in slight pullback last few months it was able to keep its head below 15, but now real test
- Bitcoin has done an about turn. Moved from 72k to 54k, looking like tanking and signalling big drop in markets, well, it has now recovered to 66k - well, inference from here is markets will not collapse, there may be pullback, but nothing severe, but lets see if bitcoin indicator is a good one
- Sentiment Indicator - on 49 Neutral. Last several months it was at odds with market, saying market has to drop. Market has slightly dropped but not much. I feel current indicator is a good reflection
- Russell 2000 finally waking up from its slumber. A good rise in last 2 weeks, and first time in months if not years, outperforming other indices. A good sign for commodities, resource, risk assets, small caps. Lets see if it continues. It moved from 2148 to 2184 this week, made a gain of over 1.5% - so a good play when SP 500 dropped 2% in a week
- Yields have dropped last couple of weeks, so in right direction. Next major action could happen on rate cut.
- Dollar Index has also dropped, so in right direction for general markets
- Gold, Silver and Oil - all made a good rise, but last couple of days when SP 500 was having a fit, they joined the group, so slight weakness now
- So overall markets still doing well, commodities, resources, risk-on-assets trying to make a comeback
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What may happen next week - General Markets/U/Li/REE:
- SP 500 is in consolidation/correction territory. It has risen from 3500 to 5600 without much obstacles. Many thought it will scale 6000. But many others are waiting for months, since it went past 5000 to see a correction. Is this the time? We don't know. But if we have to have a correction, current time looks very likely on probability. So time for caution.
- Russell 2000 needs to continue doing what it is doing for last 2 weeks. I feel only if it reaches close to 2500 will there be some indication that it has also joined the party of SP 500, of Magnificent 7, of tech stocks. Still a way to go, but that's the minimum.
- Key economic data this week around - Not much date this week, PCE on Friday. So technical and sentiments may drive the market.
- Uranium Sector overview - I made a call several weeks back that CCJ will make new highs between 55 to 60 in this phase of rally. It reached 56.24 on 31st May. Two weeks before end of May, I wrote there is a very good probability we will do tops in next 2 weeks. Somehow it played out that way. I wrote that after this CCJ may go towards 45. On Friday it played in 45. So both the things have played out exactly, somehow. My third thought which I have been writing for couple of months is that we will bottom towards end of July. So we are reaching that point. Lets see if it plays out that way. If it plays out that, fourth thing I have been saying is the next top will come between mid to end September. But that is still away, lets see how July plays out. I had got out of all my U stocks in end of May. If it looks like playing my way, I may start adding U stocks soon. Lets see, there are big analysts out there very successful, don't know what their opinion is, so please dyor.
- Lithium Sector overview - Few weeks back I wrote that - "Lithium sector is in serious trouble". Nothing has changed. We are in more trouble. At this stage, one would think the sector is nearly dead. No new money will come here. Just in last 6 months, across ASX 90 Li stocks, we have lost 41%, only 67of 90 stocks is in green for calendar year 2024. It is dire. Every week a lot of stocks make fresh 52 week lows. This week again a lot of strife, a lot of stocks making new 52 week highs including ALB which I use as a measure. So overall, extreme caution to play this sector. Of course, if things turn round, it can turn quickly, those buying now would do very well. But more risk averse would think of waiting, seeing some signs of reversal before committing. Its individual risk/reward. My sentiment is to play with extreme caution, especially around new plays. But things can change quickly, so best not to make assumption but follow price action.
- REE Sector overview - REE stocks overall have done better than Li stocks. But last couple of weeks, first big sign that it is falling in line with the malaise happening in Li sector. So the bright spot which was there, I can feel its no longer bright. Its not yet turned dark though, so hope is still there, but something has changed in last couple of weeks where many big stocks are in decline - they were leading the sector - like WA1, BRE, ENR etc, but suddenly a question mark. It could still be normal pullbacks, and I hope it is, but I have my concern now. Hope I am wrong. Still overall its done better. But that better has been only to specific stocks, most stocks are still in red. Eg for 2024 calendar year, 22 out of 30 REE stocks that I track are in red. Its more a reflection of Russell 200, commodities, risk stocks etc. So lets hope it turns.
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Personally:
I have been shuffling around some stocks was earlier due to June tax transactions, but now because 2 main sectors which I play often, are not in a good state. U stocks reached a peak end of May, I got out of most of my U stocks then. Its in correction zone, trying to find the bottom, may happen by end of July when I may get in. I am eying it now to see if really end of July marks the bottom. Also depends on general markets, they shouldn't tank, like 10/20%, otherwise they will drag down even U stocks who are trying to playing cyclical game. Li stocks have had no luck like U stocks, its still in doldrums, I have very small holding comparatively in these 2 sectors now. I am waiting for a turn, no signs this week. So mostly playing health stocks, with some splattering across Gold and Oil/gas - most of these I play standard spreading the money, so don't usually write there, but currently I have got around 10 stocks in these sector I am playing there.
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Stock/Sector specific Info:
- This week AGE playing in 4.6/5.3 zone mostly, like last 2 weeks. First time touched the bottom play of this range - 4.6. I really hope it hold. Otherwise I fear it could drop to 3.8. Not alone though, lot of other stocks, including U stocks may fall too, that could happen if markets go into correction. So something to keep an eye, probability of dropping that much is not high, but best to have an open mind and follow price action - especially those who are looking for short-term trades like me, long term is a different story
- From a weekly perspective moved from 5.2 to 4.7, so decent drop
- No ASX U stocks did a 52 week high this week, again this week. We are clearly in correction zone now
- U stocks down 15% for the year, so not a good look, in January we were in front, in mid 30s, so a big turnaround, nearly 50% drop from January
- In May I had written I had exited most of my stocks at average 6.2. Have not yet bought. I also exited all the big stocks I was playing, 80% by before end of May when I made a big call that we will drop here, rest in first week of June
- U future is now at 84.35, so slightly down from last week, hovering around mid 80s for last few weeks. No clear bullish signal currently - for short term
- As I mentioned above in my review, it looks like may have topped end of May. CCJ may go towards 45. 6 weeks back I had written most U stocks will lose between 30/40 - many have already lost in that range. There is a chance now it may even reach 50%, especially if CCJ drags down the going to 45 for few weeks. If it is swift and done in a week, that will be very good. But if drags down for 3 to 4 weeks, say bottoming at end of July, till that most U stocks may not rise, chances are they may drop a bit more. Hence the drop to 50% comes into picture. But lets see.
- On Friday US U were in slight green, but not before CCJ played in 45 which I have been calling for couple of months. Monday we may have a positive to neutral start. U may be feeling slightly green, but general markets overall red, so end result for us could be neutral.
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Here is the Figures for the Week:
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(20min delay)