ASX All-Ordinaries Index Trading in a Weak Territory, One Stock in a Buy Zone - PGC

ASX All Ordinaries Index (.AORD) Market Round-Up

Last week, ASX All-Ordinaries Index (.AORD) are facing volatility as the Russia-Ukraine tension intensifies which creates panic selling in global markets. Notably,. AORD settled at ~7395.30 with a marginal increase of 1.67% for the week ending March 04, 2022. Overall, the domestic markets are trading in a range with a weak bias.

The broad market index broke an ascending channel pattern by downside on a weekly chart indicating a possibility of further downside potential. As per the technical indicators, prices are currently trading below the 21-period SMA and 50-period SMA and the next resistance level appears to be at 7659.99. The upcoming macro events that may impact the market sentiments include an update on the Australian Westpac Consumer Sentiment, US JOLTS Job Opening, US Consumer Price Index, and US Unemployment Claims data released Weekly.

Global Markets Wrap-Up 

Wall Street indices showcased weak signs as the Russia-Ukraine geopolitical tensions intensifies. Notably, S&P 500 settled at 4328.87 with a decrease of ~1.27% while NASDAQ Composite Index also declined sharply to reach 13,837.82 losing ~2.47% for the week ending March 04, 2022. Markets declined despite of decrease in the US unemployment claims data. The seasonally adjusted initial US unemployment claims data published by the US Department of Labor declined by 18k to 215k for the week ending 26^th February 2022 against the revised unemployment claims at 233k in the prior week.

Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of ASX All-Ordinaries Index (.AORD) for the upcoming week, now let us have a look at one ASX-listed stock from the technical standpoint. Noted below is our recommendation based on generic insights, entry price, target prices, and stop-loss for Paragon Care Ltd. (ASX: PGC) for the next 2-4 weeks’ duration: -

Paragon Care Ltd. 

Paragon Care Ltd. (ASX: PGC) is engaged in offering end to end healthcare solutions, consisting of equipment and service solutions for acute, aged and primary care. Below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

On the weekly chart, PGC stock price broke its ascending channel pattern by an upside and the prices are sustaining above the breakout trend line from the past two weeks. Now the stock is heading towards its next resistance level at AUD 0.480 and in the short-term (2-4 weeks), prices may test the level. An upside above AUD 0.480 level supported by volumes may extend buying in the stock till AUD 0.520 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) move up to ~69.51 level indicating positive price momentum. Also, the CMP is trading above its 21-period and 50-period SMA showing positive price trend. Volume analysis is showing a positive signal for the stock prices.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for Paragon Care Ltd. is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Paragon Care Ltd. is looking technically well-placed on the chart and we have a ‘Speculative Buy’ rating on the stock. Investment decisions should be made depending on an investor’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical indicator analysis, and fundamental analysis has not been considered in this report.  The summary of our recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the ASX All-Ordinaries Index and listed stocks’ prices:

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within a short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Note 1: Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and is subject to the factors discussed above.

Note 2: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume and we consider stocks with greater than or equal to 500,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest. 

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of Target 1.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is March 07, 2022. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

AUD: Australian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

Kalkine New Zealand Limited is authorised to provide general advice only. The information on this website does not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions.