Weekly Review U Stocks - 26th 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
- Last week I wrote some real test coming up for SP 500, first time in long time - "Question is whether this is correction 10/20% drop, or pullback 2/5% ?" - SP 500 dropped nearly 5% by Thursday, so reached that critical point - pullback or correction. On Friday, it recovered, so for now the correction 10/20% drop has been averted. From a weekly perspective moved from 5505 to 5459, so lost just over 1%, which is not big in scheme of things. Last week it dropped 2%. All these numbers are still good and has not taken away the bullish market pattern
- Volatility Index VIX is at 16.39, it had reached over 18, but a big drop on Friday of over 11% saved the week. So again, tentative indications, saying to be watchful rather than panicking or taking big risks. Last week too it was in 16s, so not much change here.
- Last week I wrote that Bitcoin plunging to 54k from 72k was not good, but recovery last week up to 66k may have an indicator that general markets may not tank now. Bitcoin currently at 68k. So markets may be fine for now. There is no guarantee, but Bitcoin is used as a leading indicator for markets, and probability has been good till now, so lets see
- Sentiment Indicator - on 45 Neutral, last week 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, something I wrote last week as well
- Russell 2000 finally waking up from its slumber. A good rise in last 3 weeks, and second 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 2184 to 2260 this week, made a gain of over 3.5% - so a good play when SP 500 dropped 1% 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 dropped this week, but not much. Last several weeks, no strong direction here, Silver/Oil had a bigger drop, but still within range
- 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 testing now whether it needs to go 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. Friday play may indicate that it may go higher towards 6000 first before going back to 5000, but I am not convinced, yet. Its a bit shaky, personally I wouldn't be surprised if it drops. So caution
- Russell 2000 needs to continue doing what it is doing for last 3 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. SP 500 stocks are trading 15% above their average PE of 20 years. Russell 2000 stocks are trading 30% below their average PE for 20 years. What does it mean? Long term averages and performance dictate that money should move into commodities, small- caps, etc. But when? That's the million dollar question. Some thought last year. It didn't happen. First 6 months of this year. It didn't happen. So is it time now it may happen? Odds are good, but better follow market than predict and play.
- Key economic data this week around - A big week coming up. Fed rate decision on Friday. Powell talk. Big market moving indicators so something to watch closely. Expectation is rate will be on hold, but what Powell says for next couple of months may be more important.
- 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.This week it played around 45, dropping to 43.57, before recovering and finishing at 45.17 on Friday. So its there on the button of my price to make a reversal. Very important next week, if it holds, July bottom theory may have played out. Next top in mid to end September, reaching around 65. But if it doesn't hold, 39/40 for CCJ is in play. I feel it can happen, but I also feel that may happen most likely if general markets too go in correction - SP 500 dropping 10/20%. But if general markets behave, odds of this bottom is not bad. As I always say, best to follow price action and not assume anything. As I wrote last week as well, I am a very small insignificant person to make calls on whole U sector, there are big analysts/influencers around - I may have been lucky with my thoughts. But the luck has been running for couple of years, so lets see.
- Lithium Sector overview - I am writing same as for several weeks now, no change, sadly for Li holders. Over a month 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 43%, only 6 out of 90 stocks is in green for calendar year 2024. It is dire. And what are those stocks, small speccies - FRS/LRV/PEC/PSC/WCN. Only VUL is worthy of taking note. So really bad. 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 - I feel same as last week. REE stocks overall have done better than Li stocks. But last 3 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 few weeks where many big stocks are in decline - they were leading the sector - like WA1, BRE, ENR, MEI 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. This week a big drop of 6% across 30 stocks, but many stocks had a bigger fall, 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. Drop in WA1/BRE is mostly concerning. So lets hope it turns. But now caution required to play just the sector.
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Personally:
I have been waiting for all the 3 sectors Uranium/Lithium/REE to turn around. Playing very cautiously, not playing general sector at this stage. Just a few stocks here and there. For U stocks waiting to see what happens this week. For Lithium/REE I don't think in short-term sentiment may change, so may wait. 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 3.8/4.6 zone. So now we have lost a zone, first time in this downtrend moving from 4.6/5.3 to 3.8/4.6. We touched 4.2, so 3.8 is not far away if the sector doesn't come back soon.
- From a weekly perspective moved from 4.7 to 4.2, so may not look bad, but its constant decline and we have already touched and play 4.2, so caution
- No ASX U stocks that I track did a 52 week high this week, again this week. We are clearly in correction zone now
- U stocks down 19% for the year, so not a good look, in January we were in front, in mid 30s, so a big turnaround, nearly 50/60% 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 82.45, down from 84.35 of last week. Nothing alarming, and now for several months its just playing in mid 80s (+/-). I remember when it reached 100, many were calling for 1000, euphoria state. It needs to hold 80. When it was in 40/50s, everyone was saying it needs to get over 80 for mines to open. It got over 100. Now its getting to 80. If it drops below, psychologically it may not be a good feel.
- On Friday US U were in slight green, but not before CCJ hovering around 45 Monday we may have a positive to neutral start. U may be feeling slightly green, general markets too green, so a timid but positive start to the week.
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Here is the Figures for the Week:
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(20min delay)