Can AEE stay away from its 52 week lows?.
From a weekly perspective, AEE had a decent drop from 15.5 to 14. If not for closing auction and some rebalancing, it would have looked more ugly.
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So what is happening in AEE? Playing extremely weak. Reached 12 after nearly 3 months.
Looking at 3 major major factors in play- U macros - This is in decline. CCJ has now dropped close to 20% from its highs. Spot price on a big decline, now at 73.85. Looking very weak. And psychologically will kill any positivity. People were talking about 150 by the end of this year, some 200, some 1000, after it reached 106 in January. Unfortunately, that was the top. Its going reverse since then.
- ASX U play - ASX U stocks were in clear divergence before, now that divergence is getting narrower. Unfortunately, not by the path that ASX U stocks are gaining and bridging the gap, but US U stocks dropping big time
- AEE Play - Playing weak. Following macro. Following how most ASX U stocks are playing - extremely weak
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AEE play is weak. It is just following the U macro, the ASX U macro, and playing weak. From a numbers perspective, it needs to hold here. Down, now 10.5 becomes a number. Upside, I don't think anything below 18 will give a big confidence. 18 was a challenge before, and after raise at 14, may remain for a long time.
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Last few weeks I have been talking how ASX stocks (Li/U ) playing weak compared to other jurisdictions. The good play, of ASX gaining has not happened. CCJ has now dropped over 20% from its recent high of 62.55. Its looking very vulnerable, and more importantly at a very critical juncture. If it continues to drop, it will be another calamity for ASX U stocks - new lows will be made. Nearly most ASX U stocks have made a new 52 week low in recent times. That play may continue. So what can stem that rot? CCJ hold around 51/52 - a 20% drop. Any further drop, it could suddenly reach 45. And will drag the whole sector..
So what play should we expect for any positivity?
- CCJ - first level is 58. It needs to go there, soon, That was a play and high from before. But most importantly hold 51/52, and don't lose psychological number of 50, otherwise there may be pain in short term.
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Personally, writing same as last few weeks - 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? This week more turmoil, more 52 week lows. Something is not right. I don't know what. I am just following price action. I was very tempted to buy AEE today, but had to hold myself. Want to see play tonight, or next few days. No point trying to pick bottom. Better to pick trend. And the trend is still down.
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So what may happen next week? Very uncertain state. Very concerning as well. It needs to hold here. Otherwise big trouble. No Santa rally till now, instead going in opposite direction. But things can change. I feel we are vey close to the bottom of this phase. But best not to assume anything. Follow price action. The good time could start with CCJ holding 51/52 tonight and going towards 58. Will that happen? Lets hope so. Enjoy your weekend and all the best
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