Which way will the pendulum swing?.
From a weekly perspective, a small gain. Last week 114.5, this week 117.
.
So what is happening? I feel DYL is playing the macro. And what is the macro saying? I feel we are at a very critical level. Next few days trading will tell us whether we will make new highs in the coming weeks, or may be months, or are we condemned towards bottom.
.
Lets take a stocks of what I have said for medium term
- May End/Early June top (it played perfectly)
- July End/August Early bottom (It played a bottom, but some did go low, so played well but not perfectly)
- Sept End/Oct Early top (looking unlikely in the scheme, stocks should have risen more by now)
.
Now lets take a short term view of what I said
- CCJ needs to hold 35 (it has held)
- CCJ needs to churn at 39/40 (it has done)
- Based on previous pattern from its previous 35 low, in 3 weeks it should make an attempt at 45. That 3 weeks will be by end of next week. (Its possible)
.
So what is critical now?
- ASX U stocks had a big rise yesterday, both on the back of Sapparo and general markets
- US U stocks did not do that well, if it was replicate ASX U play, CCJ should have been sitting north of 42, instead its trying to hold 41. That was weak play
- ASX U stocks did not like US U stocks play from yesterday. It was not strong enough. So instead of gaining today, they eased.
- We got 4 to 5 days of trading, where I believe CCJ needs to gain over 10%.
- We are on a momentum play. I feel if momentum is lost, it may not happen
- Spot price is still under 80
- So the critical thing is - CCJ needs to make a move next week towards 45
.
Lets look at probabilities
- General markets are good
- U macro improving but not spot price
- At this stage I feel its 50/50 whether CCJ makes an attempt at 45 by end of next week (makes an attempt, I am not talking about crossing)
- Chances are we may get there, but maybe not in timeframe
.
So what am I thinking
- I still believe we will make new highs in next few weeks or months
- I am playing according - most of my play now is in U sector
.
Personally last week I wrote that I had got out 90% of my holding at 117, my average buy was 92. This week I bought some more to add to that 10%, unfortunately wrong timing, I picked up yesterday and today, my average now is 118. I bought a good amount yesterday, I should have waited. If not that 10% from before, my average would have been 120.
.
So what may happen next week? All depends on CCJ. On weakness it needs to hold 39/40. I was watching trades yesterday, whenever it tried to make a move, it was shot down. We need more punters who want to embrace rather than shoot it down. Tonight is key - if it hold 41 it will be positive, if it drops but holds 39/40, still the play for new highs is open. If it finishes in green, odds of my play of making an attempt at 45 by end of next week increases considerably. More importantly, we will have a very good start to the week on Monday. Will that happen? Lets hope so. Enjoy your weekend and all the best.
(20min delay)