Officially we are entering the ASX300. Potentially in 3 more months the ASX200. I've felt that both of these entries will be beneficial to IMU share price, but lets take a better look, and then we can have a look specifically at how IMU is tracking at the present time. While its true that certain index funds are forced to buy when a company joins the index, there are in addition many other funds that only buy top 300 or top 200. There are also many retail that only buy top 300 or 200 as well, so I think the biggest benefit here is not the index funds, it will be all the extra investors that will now find IMU. Mainstream news will also be inclined to cover companies in the indices.
ASX300 InclusionBelow are the charts of the tickers included in the 22nd March 2021 ASX300 re-balance. NXL is not show as it was also included into the ASX200 at the same time and can be seen there. First chart is the ASX300 Index itself. When comparing that to the ASX200 its pretty much an exact copy, and this would be expected. If there was a difference between the two, it would mean the 100 smallest companies are out performing the largest 200 (positively or negatively). This means that when IMU (or any company) correlates with the index, the more popular asx200 can be used as a good measuring stick. This in itself has its benefits. When the ASX200/300 has a good day, and IMU itself has its own reasons for a good day, then we can expect the up moves to be exaggerated. When the ASX200/300 has a bad day and IMU has its own reasons to still have a good day, then we can expect the move to be muted when compared to its peers. The same is true of course when IMU has a bad day, however I don't anticipate these being a regular occurrence.
Looking at the tickers that were included, its important to remember that each ones has their own fundamental and technical story and its own passionate investors. So looking at one won't help us, however if we look at the group together we can see any potential patterns.
- What we see consistently is a large volume spike on the Friday prior to its Monday re balance. I expect this to take place in the closing auction as it did with MSCI inclusion.
- Monday morning was general low volume.
- There was some whipsaw both ways throughout Friday, but nothing major. Unfortunately the way I took the screenshots you cant see the candle wicks, but its the body that's important (unless you have a tight stop loss. You may want to consider removing your stop for Friday's trade, but know the risks.)
- Remember March only had 1 week between announcement and re-balance. Volume generally picked up during the announcement period
- Price generally increased over the announcement period and most for a short period after for a breather
ASX200We see a few differences between a 300 inclusion and a 200 inclusion. I suspect because the tickers were (with the NXL exception) already included in the ASX300. We see the same volume spike on the Friday. One of the key differences, and I suspect because they were part of the 300 index already, was that the individual ticker price generally tracked the ASX200 for the announcement period. Following the inclusion their bear move carried on even when the ASX200 turned bullish. This could have been due to any number of reasons, remembering that they all have their own stories.
Lets now look at IMU specifically.
WeeklyAt
1 in the pink we have a massive bullish divergence. This I believe is now exerting good buying pressure and will give us some really good momentum to continue into a prolonged bull run. Looking at the orange
2 we see that all our MA's are increasing their slope, even the big 100 and 200. This indicates momentum is picking up. Price finds it
very difficult to break through these particular MA's when they are steeply sloped. Price loves to come back and touch the green w5 and often the yellow e21. It will happen, but it doesn't need to happen immediately. Also keep in mind that each new bar adds the angle in height to the MA, so our w5 will probably open around 0.36+ and the e21 will pop up also.
We are very much in our A-B-C-D Fib trade now. With C at the 50%
our D1 target is 161.8% at 0.740. Two major hurdles on the way that will be good places for retracement or breather and consolidation is the 0.0% high at 0.495 and the Nov 423.6%/ current 138.2% Fibs at the 0.645 Zone. Need to see a break through followed by a retest to validate these levels as support, as shown on the hourly chart section.
DailyWe don't have to worry about bearish divergence yet, the MACD is cooling off with this little consolidation. Looking at the white lines we have a likely inverted head and shoulders forming; the horizontal dotted lines giving us some potential scenarios. While I don't want to see a retest of the 38.2% fib at 0.340 (I want to go go go momentum run) I think it would be good for the price long term. Whether we get there or not remains to be seen - the yellow e21 will rise and offer significant support in the mean time. We are also building a little base here at the 0.385 zone which may hold enough to get a kick from the entry to the ASX300 if past patterns hold. The green dotted lines indicated potential price scenarios over the next week or two. In the orange circle is a strong bull continuation pattern, the e55 has been repulsed away from the e100 and now the MA's are back in order increasing slope. I would expect to see the w5 give us a blip, which I think is what we are seeing form here.
HourlyWe have a big bullish divergence underway at
1 giving a fair indication of an imminent bull run over the next couple of days. The blue e100 has crossed the red e200 giving us the strongest bull signal in my arsenal, which is why it kicked off the 38.2% like it did. Looking at the yellow we see price forming a wedge between the trendline and the yellow e21. e21 is strong enough to win any day of the week and I expect this to move higher. Also drawn in green are the sort of scenarios we are looking for as we approach these major resistance levels. It may be multiple breaks above and below, however we need to see it hold and bounce under a retest to validate it as support. Once we get that on 0.495 then we are on our way to 0.740 with a rest on the way around 0.645 zone. The red trendline is a current trendline we couldn't get through following our first retrace from the highs. I would expect it to offer some resistance but it should fall fairly easily.
All in all, along with the above technical picture and
IF similar patterns occur with this re-balance as what happened in March, I anticipate this coming week to be stellar. The next couple of weeks should give plenty of smiles. The silence of the muppets will be the source of my smile.