ASX Weekly Market Outlook and the Top Movers Last Week

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It was another week treading water for the All Ordinaries [XAO]. While it may sound like a broken record after another week of sideways trading, a lot of earnings came out it in a week that revealed the current state of the Australian economy.

The likes of JB Hi-Fi Ltd [ASX:JBH] had a massive boost to their online sales, whereas Qantas Airways Ltd [ASX:QAN] is doing all they can just to survive.

COVID-19 completely changed how we all live and shop — which is being seen in the varied fortune of Australian companies.

The past week saw the XAO just sneak over the high set in June of 6,314, only to fall back and close near its open.

Opening at 6,261 and closing at 6,270, the All Ords recorded only a nine-point move for the week, indicating there may be a lack of commitment to moving the market higher.

ASX outlook for the week ahead

The week coming for the All Ords may be another flat movement. With some companies still to report their earnings and the mixed nature of business at the moment, there should be some good news to come out, some not so good.

We are now pushing into September, and the looming impact of the JobKeeper and JobSeeker payment being stopped has resulted in ‘JobTweaker’. Meanwhile the mortgage repayment holiday has been extended through to January 2021, effectively kicking the can down the road.

asx outlook

In the short term these extended measures will help us avoid the looming ‘cliff’ that was predicted for the end of September, but by moving them all out are we just robbing Peter to pay Paul at a later date…

A closer look at the ASX

The week been saw a lot of mixed results in the stocks.

Corporate Travel Management Ltd [ASX:CTD] and Monadelphous Group Ltd [ASX:MND] both recorded strong double-digit gains of 20.88% and 29.26% respectively.

Pulling back were AMP Ltd [ASX:AMP] and GWA Group Ltd [ASX:GWA], with declines of 8.33% and 9.42% respectively, while Treasure Wine Estates Ltd [ASX:TWE] had a horror week, falling back 22.82%.

In the sectors, Consumer Discretionary and Information Technology were both up 4.24% and 4.56% respectively, while Consumer Staples and Materials fell back 3.36% and 2.09% respectively.

This reflects the shift to tech, and perhaps a sign of growth for everywhere except Melbourne.

A broader outlook for the ASX

Over the last nine weeks the All Ords have moved sideways and as we collectively move through COVID-19, day by day our lives are changing.

What doesn’t change is the market.

In its most boiled-down, simplest format, the market remains a place to speculate, and in the words of Jesse Livermore (one of the greatest traders to live):

There is nothing new in Wall St. There can’t be because speculation is as old as the hills. Whatever happens in the stock market has happened before and will happen again.

It’s human nature to speculate on just about everything. Will I get a new car? Will that person marry me? Will I win a game? And, of course, will the market go up or down?

xao

Source: Optuma

With COVID-19 swirling around the planet today there seems to be a million ideas about what may or may not happen to us all — speculation!

The same can be true for the market and this can be overwhelming.

All the information can be difficult to get through and a lot of it is conflicting at times.

But it can be filtered.

Back in July we discussed the Elliott Wave sequence and why this tool of prediction may be pointing to another drop in the market.

Fast-forward five weeks to today, and the market is still finding it more and more difficult to crack through 6,300 points.

In my opinion the market is in a period of distribution as it moves sideways.

With business confidence frailly low and the unemployment rate high, this period of sideways movement may just be the moment before another fall.

But only time will tell.

Regards,

Carl Wittkopp,
For Money Morning

PS: Four carefully selected, well-positioned small-cap stocks: These innovative Aussie companies are well-placed to capitalise on post-lockdown mega-trends. Download now.

About Carl Wittkopp

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

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