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From a weekly perspective, PEN dropped from 123 to 110. Old metrics - 5.5 now. Its not good. Everyone is a loser, except some who can claim to have bought at just below 100. Statistically not important.
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So what is happening in PEN? Playing weak. All week it looked like whether it could hold the current zone around 100/120 play - a wide range, it stayed there in between
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Like last week, there are three major factors in play- U macros - This is looking very strong in US, very weak in ASX
- ASX U play - ASX U stocks have now clearly diverged from major plays of US - CCJ/UEC etc - they are doing 52 week highs, ASX U stocks trying to do 52 week lows - or close to it
- PEN Play - Playing weak. At this stage ASX U macro is so strong, no news has any affect.
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PEN play is weak. It is just following the ASX U macro, which is extremely weak. From a numbers perspective, I don't have a view. Best to have an open mind. We never know if there is another bad news round the corner. Very risky to hold the stock now, considering ASX U stocks are playing so weak..
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Last week I mentioned that ASX punters are playing very weak across a lot of risk on stocks. Start differences now in my assessment across Lithium and Uranium stocks, which I follow very closely.
Eg Uranium, US stocks are doing new 52 week highs. Most ASX U stocks, either near their 52 week low, but at least over 50% below their 52 week highs. This is going for few months now.
In Lithium, similar story. US ALB around 50% above its lows. Chinese Ganfeng just under 10% from its 52 week high, around 60% above its 52 week lows. And ASX Li stocks? Most close to their 52 week lows, if not at lows. Huge divergence. This is going for few weeks now.
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The message is clear..
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- Its a very bad time to play Commodities, Risk-on stocks.
- It is specially the worst time to play ASX Commodities and risk-on stocks.
- If one one wants to play these sectors - like Lithium, Uranium etc, don't play ASX stocks. Play US/Chinese etc.
I have seen and reporting this pattern in Uranium sector for few months now. I have started writing this on Lithium sector in last few weeks. This is based on numbers. I am not saying why that is happening, just reporting what looks like happening. As usual, its my interpretation, I could be wrong, so please dyor. Especially because to make a call like ASX arena is not to be played in these areas, is a very significant observation
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Personally, I had exited most of my ASX U stocks, especially after seeing such a strong divergence. The message was clear, not to play ASX U stocks, until it changes. We can have a complete U boom, and it could just bypass ASX U stocks - its looking real now. Now 4 months of this divergence has happened. How many months of more data do we need to be sure?
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(20min delay)