This is just a view of stock market activity, based on technical analysis. It does not take into account fundamentals — like sales growth, margins, return on invested capital, debt and expected dividend streams — and is not a recommendation to buy/sell.
There were two notable breakouts this week in the Russell 3000:
Amazon (AMZN) was the clear winner, breaking resistance at 3500 after forming a solid base (between 3000 and 3500) over the past 10 months. Rising Money Flow troughs signal increased interest from buyers as Jeff Bezos handed over as CEO to Andy Jassy.
RGC Resources (RGCO) was runner up, breaking resistance at 25 at end of the June quarter. The base is not as well-defined as for Amazon, with penetration of support at 22.50 in April ’21 before a strong recovery. Respect of support at 25, however, would confirm the bull signal.
The closest we have to a breakout this week on the ASX 300 is Rural Funds Group (RFF). After breaking resistance at 2.40 RFF formed a loose “cup and handle” pattern1, with a sharp pullback to test support at 2.30 followed by a rally to test resistance at 2.65/2.70. Divergence on Twiggs Money Flow, with a lower TMF peak, however warns of stubborn resistance and another test of support is likely.
Notes
- The “cup” on RFF runs from August ’19 to October ’20, the “handle” from November ’20 to the present.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.