This is our weekly ASX MoMo (momentum) report. We have analysed the ASX 200 through our stock screeners to give you the top stock recommendations with positive and negative momentum to help you get an edge in your trading. We also look at whether the ASX may be primed for a reversal based on its market internal indicators.
In this report we look at:
The ASX may find a bit of selling after the election result, but whether the post-Brexit rebound continues globally will be a bigger driver.
We have longed the companies that have come out best from Brexit: AX:ACX, AX:SVW and AX:SHV.
While two stocks have continued to underperform post-Brexit, AX:AOG and AX:NSR, and we have initiated shorts on them.
The market internals for the ASX have bounced back somewhat, but more reflect the rebound rather than breadth to significantly move it higher.
After whipsaw trade following the UK’s Brexit vote, the ASX saw four-days of consecutive gains last week. However, the uncertainty the weekend’s election has brought is likely to impact the current upward momentum in the ASX.
Global market sentiment is likely to be a bigger driver for the ASX than the elections, although the elections may result in some initial selling on Monday. If the ASX does manage to find some buying this week, then its first target would be regaining its pre-Brexit close of 5281.
But there is a real risk that some of the post-Brexit ebullience disappears from markets this week and begins to weigh on them instead.
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