AEE trying to hold the 15/16 level?.
From a weekly perspective, AEE had a slight gain - moved from 15.5 to 16, but nothing convincing.
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So what is happening in AEE? Playing weak. All week it looked like whether it could hold the current zone around 15/16. It barely did.
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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
- AEE Play - Playing weak. At this stage ASX U macro is so strong, no news has any affect.
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AEE 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. It would be good to hold15 things don't look good. Without getting and staying above 18, there is no bull play.
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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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So what may happen next week? CCJ made a new 52 week high yesterday. UEC nearly. And how did ASX U stocks react today - looking for cover. Ok, not nearly, I can join the party too. Some tried to gain 1% for the day. Overall still below 50% below its 52 week high. Still with 10/20% of its 52 week lows. What Uranium boom?. Its sad. Lets hope we see something better next week. Enjoy your weekend and all the best
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