ASX200 Stocks to Buy Now | Gold, Uranium | Episode 99

By Jason McIntosh | Published 13 January 2023

Trade the Trend is a weekly video focusing on where the stock market is going. It’s for investors and tradtraders looking for technical analysis of the ASX shares, the ASX200, the SP500, as well as stock markets and commodities markets in general. Jason uses technical analysis of stocks and trend following techniques to help you piece together the world’s biggest puzzle.

Where is the Stock Market Heading?

00:00 Intro

00:37 ASX 200 technical outlook encouraging (but look out for this)

02:44 The latest Small Ordinaries update

04:47 Here’s where I’m seeing the opportunities (and how I’m playing them)

06:48 This ASX stock just gave a buy signal

10:53 How to play the latest move in gold

14:20 Look what copper just did (it’s following the script)

15:35 This is where I went wrong with uranium

Transcript

Please note: Charts available from video

This video is going to focus on the ASX 200. I’m also going to cover gold, copper, and uranium. And I’ve got a really interesting chart to show you of an individual stock, one which could be giving a buy signal or buy opportunity, so make sure you stick around for that. I’m going to cover the S&P 500 in a separate video, and I’ll leave a link for that in the description section below. As always, this is general commentary and doesn’t take your personal situation into account. With all of that said, let’s get into our first chart.

So, here we have the ASX 200 up on the screen. And overall, it continues to trade quite well since we spoke last week, though the ASX 200, it’s above these moving averages. So, I’ve got the 50 and the 100-day moving averages on the screen. And it’s also interesting to see the market is rebounding off this moving average region after the ASX 200 made its high in November, fall back towards the moving averages, which is something that we spoke about over the last month or so on the video looking for the possibility of this move.

So, what’s been interesting and encouraging here is that the buy-the-dip has really been occurring. So, this is what happens when the market comes back towards the moving averages. There’s been buying. There’s been accumulation, and now we’re seeing the market rally again. Also happening off this Fibonacci retracement region. So, it’s all looking quite encouraging in terms of how the ASX 200 is looking at the moment.

And my hesitation with buying the ASX 200 outright potentially in an ETF form is that it is currently testing this resistance region which is up around 7200, and it’s only a small distance from its all-time highs. So, it just makes me a little bit hesitant towards the overall index. And I like the positive backdrop that it gives, but I’m more interested in individual setups than the actual index. So, I think this is giving a positive backdrop for the individual setups rather than providing the opportunity on its own. But I’ll give you a little bit more information on the setups which I’m looking for and that I’m seeing a little bit later.

Now going over and having a look at the small ordinaries. So, this has been a positive week for the small ordinaries as well. We’ve seen the market bouncing off support. We’ve got this support band down here at around 2800, and the rally off this support has continued over the last week. The small ords is now back above the 50 and the 100-day moving averages, and it’s heading towards this resistance at around 3100. So, I would say at this point that the path of least resistance for the mid to small caps is to the upside. I think that’s where we… I think our base case should be that we continue to look for further gains and extension of this rally into January, potentially into February.

I actually bought some ETF, small-cap ETF. It’s the Vanguard, VSO, ticker code is VSO. It’s a Vanguard ASX 300 ETF. I bought that in… I think I told you at the time. It was back in around November as the market was coming off these October lows. What’s been interesting, though, is that the ETF has actually been underperforming the index over the last month or so, which normally attracts it quite closely. So, it’s interesting that it’s decoupled a bit. I think maybe that could be possibly due to maybe liquidity in some of these smaller mid-caps. It hasn’t been adequate for the fund. So, I’ve been getting better performance in the individual small-cap holdings that I’m buying through my daily momentum scans and through the VSO ETF. So, yeah, interesting that you can play the small caps through your own momentum identification, and potentially do better than being in a more to mid-cap ETF.

Looking at the ASX 200 equal-weighted. You’d know I’ve been talking about this a bit over the last few months. It’s an interesting one to look at because rather than looking at the ASX 200 on a capitalized Asian weighted index basis, that’s where BHP is a bigger stock and makes up the bigger share of the index, and then it tapers down from there, the equal-weighted index looks at or weights each stock same, so the smallest is the same as the biggest stock. And this is why I’m more focused on the individual stocks rather than the ASX 200 index which is going to be weighted towards those big stocks.

This is where I’m seeing the opportunities when you get away from the top 20, top 50 stocks. This is where I see the recovery potential. And we’re seeing this quite nicely in the equal-weighted in that we’ve got this downward trend line that it broke above from in November, fall back to the trend line, and is now rebounding. So, some really good opportunities I think in the small to mid-cap range. And that doesn’t mean microcaps by any sense. Mid-caps can be a few billion dollars in market caps. So, these are still large companies but it’s just off that top tier.

Now, if you’re getting some value from this, please hit that like button and leave a short comment. It just tells YouTube that people are watching, people are engaging, and YouTube shows more people. And as I tell you every week, that makes all the difference to me and my channel if YouTube is showing new people and bringing new people over to the channel. So, please do that. It helps me heaps. Hit the subscribe button if you’re new to the channel. And also, come and visit me over at Motion Trader, and I’ll show you more about the opportunities which I’m seeing in the market on the individual stock basis. So, come over and do that.

Now, just on to individual stocks. I’ll give you an example. Here’s a stock which turned up in my Motion Trader scans this week. It’s Platinum Asset Management. So, it’s not a small stock. It’s a good mid-tier size stock. I think they’re a great fund manager. They’ve been around for a long time. Been very successful, but their share price has just had a horrible run for quite a while, actually, when you look at a weekly chart. But just going back to April ’21, it’s down something like… There was something like 70%.

I’m just going to put some moving averages on this. Let’s put the 50 and the 100-day moving averages on. So, this stock, for me, it’s been a no-go since around July 2021. So, that’s almost 18 months of just saying, “Do not look at this stock. It’s got nothing to offer,” because it’s been trading below the moving averages. The moving average has been trending lower. This is a stock which may be a great company but the timing isn’t right. The market is telling you it’s not the time to buy this stock. So, this is where you can get outperformance over an ASX 200 ETF, for example, because you can take the parts of the ASX 200 or ASX 300 or whatever it may be, you take the parts which are working and you can choose to leave out the parts that are not. So, things have changed, though.

So, I got a buy signal through my Motion Trader service this week for Platinum, and it’s the first buy signal on Platinum for several years. And it’s interesting when we look at the price action. So, just looking at this. This is really quite a nice-looking rounding base formation that we have. So, you can just put this across, and you can see it’s a rounding basing-type formation which is typically seen at low points. And also interesting, let’s just put on some volume overlay and see whether this tells us anything. And you can see that during this rounding basing period, the volume has really started to decline and quite a high volume up through the declining period. The volume really starting to taper off over the last few months. So, it’s a sign that the interest to sell has really started to dry up and that accumulation has begun.

What we’ve got recently is the moving averages have crossed to the upside, so that’s a positive from my perspective, from Motion Trader’s trend-following perspective. And also we’ve got a breakout above resistance. So, you can do this a couple of ways. You can join these two highs and you could potentially say that’s some sort of a head and shoulder type, inverse head and shoulders pattern. Maybe you’ve got a shoulder, you’ve got a head, you’ve got a shoulder. You could look at it from that way, or you could also just look at it from the more classic resistance-type breakout. You can draw a resistance band through there lining up these highs, the main high from August and the high from November, and we’ve got a breakout there. So, to me, that’s saying this is an opportunity worth… It’s worth noting. And I think you put the odds in your favor, I think, by buying breakouts and going with the trend like this and trying to buy during this period here. So, interesting.

I’ve seen quite a few stocks like Platinum turn up in the Motion Trader signals over the last few weeks, so come over, take the free trial if you haven’t already, see the sort of work I’m doing there. Really interesting stuff. I cover the whole market. There are so many interesting stocks and opportunities that come up over time. Come over, check it out. I think you might find it interesting.

Let’s move on to gold. Another positive week for gold. It continues to look good. I was saying last week that I had thought maybe gold would have some sort of a pullback towards the averages but that wasn’t happening. So, I said, “Looks like maybe we’re going to see this trend continue to push higher.” And that’s what’s been the case over the last week. Ultimately, this rally is got to be checked. I think the big-picture view on gold I think is looking really good. I think the possibility or the probability of gold making new highs maybe over the course of 2023 I think is quite good. I like the overall structure that this is quite a strong big rally we’ve had now. It’s got to get checked at some point. We’ve got to get some consolidation. The market doesn’t have to do anything but that is that typical of the market. It runs and then it pauses, it consolidates, and then it runs again.

So, for me, it’s a case of holding the gold stocks that I have and then selectively adding when I get opportunities but not getting carried away during this point after such a big move and getting too much exposure at the top. I don’t want a top-heavy exposure to gold stocks because I’m mindful that gold stocks have a habit of doing something like that, and causing some havoc for a few weeks and then they continue higher again. That’s not a prediction, but that’s the price action which you do see quite a bit in gold, and also markets generally that run, gets stretched above the moving averages, they have pulled back some consolidations.

So, as I mentioned, I think I said last week that the week prior to that through my Motion Trader service, I’ve had quite a lot of gold signals going up, the gold stocks. So, as I’ve been saying, it’s about waiting for the right opportunities, waiting for the signals, waiting for the breakouts, and getting then rather than getting too excited and chasing too hard at the stop after a big run.

There’s a gold stock I’ve been trying to buy over the last couple of days. It came up as a signal a few days ago for me but it’s less liquid. I’ve been struggling to get it and I’m grappling with not wanting to overpay by chasing due to what I was just saying about stocks pulling back but not wanting to miss out as well. So, it can be a balance. Sometimes it’s a case of getting some exposure but being patient with the balance of the position because we do need to be wary that these things can pull back abruptly.

Also Aussie gold. Just a quick update on Aussie gold. I was talking about this. I think I was talking about it back in mid-December. Maybe I spoke about it just after it had broken higher or maybe it was just pride or breaking higher. One or the other. It was like we’ve been through this consolidation band, price has now broken upwards. It looks like it’s consolidating again around 2720. This is the, yeah, break consolidating, again potentially pushing up again. I think Aussie gold is looking good. It looks like it’s trending higher above those moving averages. Moving average is positive. So, I think that’s looking good.

Now, just over to… Let’s have a quick look at copper. We were speaking about this last week. Copper had pulled back to the moving averages. I was talking about how it was coiling, how it was looking like. It was getting set to punch above this resistance at four dollars. And there we go. We’re punched above that resistance. It’s always like these coiling patterns above moving averages. It sets up that nice asymmetric risk-reward type of opportunity. And we’re now seeing this playing out in copper.

The way I’ve been saying I like to play copper is through the ETFs. This is the C-O-P-X ETF listed in the U.S. The Australian version is W-I-R-E, WIRE. And last week, we were talking about we’d had the pullback to the moving averages, and that was, again, that opportunity, buy the dip, and now we’re seeing the run. So, in terms of copper, if you’re not set in copper, myself I’d now want to be waiting for some sort of a consolidation rather than chase after such a strong week.

Lastly, I just want to finish up with a quick look at uranium. I spoke about uranium, it must have been in mid-December, and I was saying that I didn’t like that uranium was trading below the moving averages and the moving averages were crossing. And I said I like the medium to longer-term structure. I thought uranium could go a lot higher, but maybe this was going to take quite a bit more time. Of course, as soon as I’ve said that, it’s rallied back up above the moving averages. And this is the thing with markets. We are never going to pinpoint precisely the exact time to buy, the exact time to sell.

With my own uranium position, I’m holding an ETF, URNM is the ticket code. It’s listed in the U.S. I’m not trying to be clever by trying to say, “Well, I’ll sell here and I’ll buy back in down here,” because this is the thinking that can happen when you try to be too clever with the position. This isn’t a short to medium-term trade for me. This is a longer-term holding. That said, I’m still using risk management. I don’t want to let this position fly itself into the ground, but I don’t want to be trying to get in and out during each ebb and flow.

So, if you like uranium, I think uranium is now back above these moving averages, so this is a time to be considering the uranium plays, looking at the uranium plays. Maybe uranium can continue to run from here or could continue to go back and forth and just continue up. I think the overall structures are good. So, yeah, just keep an eye on it, keep an eye on that uranium, I think there’s going to be some really good plays coming up there maybe over the course of this year. So, that’s something I’ll be keeping a close eye on and keeping you abreast of.

So, hey, thank you for joining me. I’m back home. Had a haircut, had a shave, back from holidays. Great to be back talking to you again with more time to prep and go over more stuff. Come over and visit me at Motion Trader if you haven’t already. Love talking to you. Look forward to coming back next week and doing it all again. Until then, bye for now.

Please see video for more details analysis and charts

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