Will the CR make AEE further weaken?.
From a weekly perspective, AEE moved from 16 to 15.5.
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So what is happening in AEE? Overall weak. Looking very vulnerable now, from a trading pattern, stock price perspective.
Like last few weeks, there are three major factors in play- U macros - This was looking very strong in US, very weak in ASX - this week, US is retreating/consolidating
- 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 is just following the U macro, not the US U macro, but the ASX U macro, which is very weak. Last few months, I have shown a lot of data which shows that ASX U stocks are doing miserable compared to US U stocks. Not much changed this week. We wait. It was holding the level around 15/16 for quite sometime. Much above it 52 week low of 10.5. But much below its 52 week highs of mid 30s. Now another CR. Many were recovering from last one - I think from memory 18. Most did not get opportunity to get out in profit. So they must be disappointed. What number can AEE now put forward to entice them? Hopefully its not far away.
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Last week I mentioned that ASX punters are playing very weak across a lot of risk on stocks. And this play is just not Uranium or Lithium. There are 2 pressures. One, globally, risk-on sectors, spec play is weakest in last several years. More or less dead. Secondly, ASX punters are not even playing like their overseas counterparts, playing more weak. A combination of these two has made it deadly, sentiment rank poor, any positivity is based on miracles rather than numbers or trading patterns. Only thing on our side - this is going on for some time, law of probability and history suggests that things will turn one day. We may be getting closer to that day/period. Lets hope.
ASX U stocks which were lagging big time US U stocks, had to make gains and bridge the divergence. Instead, as US U stocks are sliding slowly down, ASX U stocks are also moistly drifting, many trying to hold the current levels. But still weakness across the board.
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Personally, writing same as last week - 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 is retreating. As always there can be 2 plays - a 10% drop or a 20% drop - from its highs. Its close to 10% now. Last time when it came from 56, it dropped only 10% and not 20% - it helped to make a new high at 62. If CCJ holds here, then its fine. But if it drops and reaches around 50, it may drag down the sector and ASX U stocks with it. We are already much down compared to CCJ/UEC etc. We have to recover more, rather than fall. We cannot afford to go down more from here. We need a rally, a big one to bridge the gap. Maybe a Santa rally. Will that happen? Lets hope so. Enjoy your weekend and all the best
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