Weekly ASX Market Wrap — APT and MYR Top Movers Last Week

The ASX All Ords was up 274 points overall last week, compared to the week prior. With strong trading days to the upside apart from Wednesday and Thursday, where the market fell back 58.70 and 39.70 points.

This was recovered on Friday, with the XAO trading up 71.30 points to close out the week.

The week ahead

With some luck the All Ords looks to be moving into positive territory. The market taking gradual steps to the upside over the last week is a nice change from the large and unpredictable trading the XAO went through recently. With 5,623 being the most recent high, breaking this level is the positive target for now.

ASX All Ordinaries Share Price Chart 1

Source: Optuma

A closer look

Some sectors within the All Ords gained some stability this week. Energy and Health, along with Materials, made marginal gains to the upside, whereas Consumer Discretionary and Information Technology posted gains of 3.56% and 11.34%, respectively. The Financial sector posted gains of only 1.72% and Industrials closed near on its open for the week, showing we are still a long way off recovery.

Looking into the stocks themselves, Myer Holdings Ltd [ASX:MYR] made gains of 48.21% on the back of news that it had settled a class action lawsuit with TPT patrol. And Afterpay Ltd [ASX:APT] jumped 26.8% after it announced that it secured an investment of over $300 million after selling 5% of the company to Tencent.

On the downside Qantas fell back 4.23%, highlighting the struggles in the airline industry at present, and IAG insurance dropped 5.71%.

The broader look

The hot topic right now after COVID-19 is recession. Are we having one? Will it be avoided?

Everyone has their two cents to say on the matter right now. In trading terms, the global markets have taken a beating and it’s far too early to say how they will come out of this.

But what can be done is the application of some time-tested methods to the market to get a gauge.

Legendary trader WD Gann has what he called the ‘fifty percent rule’.

When prices begin to rise or fall, the most important level at which some price reaction should occur will be the 50% level.

ASX All Ords Share Price Chart 2

Source: Optuma

By applying this to the All Ords from the high in February 2020 to the low in March 2020, the 50% level is at 5,859 points.

If price cannot move up and through this level, it may be a signal of a weak market which would raise doubts as to the strength of any recovery.

The All Ords closed at 5,325 this week. While nothing spectacular, it has shown that over the last three weeks it has largely traded sideways, showing some stability for the time being.

It will be interesting to see if the market can break through the resistance level of 5,623 this coming week.

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Carl Wittkopp,
For Money Morning

Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

Money Morning Australia