Week 36: Market Update, Gold trading plan & Liongold analysis

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

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Market update:

Monday marks the end August and alongside the new month comes the usual start of month items such as China’s PMI data and the US payrolls. These are again the ones to track the recovery pace for the global economy and play to guiding market sentiment.

Items to note

· Fed members due to make an appearance in the coming week includes Fed vice-chair Richard Clarida, Fed Bostic on Monday, Fed Brainard on Tuesday and Fed Mester and more on Wednesday. Following the Fed’s earlier-than-expected announcement of a shift towards average inflation targeting for their framework review during the Jackson Hole symposium, the market will be hunting for more details on the methodology with Fed members’ comments in the lead up to the September FOMC meeting.

· US non-farm payrolls will be released on Friday alongside other labour market data such as the unemployment rate and the average hourly earnings. Headline payrolls may see a slower pace of increase at 1.5 million according to consensus. Other US data includes the likes of August ISM manufacturing which is expected to continue showing expansion for the US manufacturing sector.

· China’s August official and Caixin PMIs will be due in the coming week, expecting a continued showing of expansion for the Chinese economy. Despite flooding affecting various parts of China, the impact is not expected to derail China in its recovery trajectory while continued recovery in other parts of the world is expected to help support the PMIs.

· The RBA monetary policy decision will be due Tuesday with no change to the cash rate target at 0.25% presently. Later into the week, Australia’s Q2 GDP will be released on Wednesday, awaiting a confirmation of Australia’s entry into technical recession for the first time in 29 years with a -6.0% QoQ print. As with most virus-implicated Q2 GDP, we see a wide berth for forecasts.

· Crude oil prices had been buoyed this week with Hurricane Laura’s disruption to the US Gulf Coast and a continued drawdown in US crude inventories. Bloomberg’s monthly survey of OPEC production one to watch on Tuesday ahead of the weekly US Department of Energy inventory report.

· Local Singapore market will find official August PMI due on Thursday with a consensus for a slightly dip for the headline index to 50.0. July retail sales due to show a smaller year-on-year decline in the Friday release.

 

Gold trading plan:

Weekly Chart: Bullish
As mentioned last week, Gold has tested 1,905 support line and have been supported. This coincides as a pattern of “dip on uptrend” where it is very bullish in nature (we have added more long gold positions when the support is confirmed on Friday).
Thanks to Powell’s update on FOMC’s future direction, Gold has successfully completed the wigsaw and is currently heading back on track on the bull run.

MACD and RSI has shifted gear from neutral back to bullish and it  will be important to monitor where Gold closes on Monday as it is last day of the month where it plays a significant impact on the Monthly candle chart.

As this moment, it does seem that Wave C downward wave is broken where bulls is currently in control.

Key support levels:

  1. 1905
  2. 1860

 

Daily chart: Bullish

From daily chart, we can see that MACD and RSI is on the road to recovery for the higher bull. It is important for gold to close above 1,988 in the upcoming week. The good news is – break out has already happened last Friday.

 

4hours chart: Bullish

From the 4hours chart, it is very clear bullish signal and hence the upside probability is much higher than downside probability.

 

Liongold update:

As mentioned last week, we have seen long accumulation of Liongold shares. As of last Friday, we have seen the sell of 0.002 has flipped into buy of 0.002.

This coincides to the good results seen in Liongold’s latest release of its financial statements.

History of Liongold:

  1. Liongold was part of the Blumont saga which has devastated many investors/traders in 2013 where the share price has crashed from $1.70 all the way to $0.001 (do google it if you wish to find out what happened).
  2. Liongold has since cleared off all its debt thanks to Yaoo capital’s injection.
  3. Due to the increase in Gold price, FY20 Revenue increased 54.9% on a year on year (YoY) comparison.
  4. Total comprehensive income for the quarter (YoY comparison): 3.3M gain (3mths 2020) vs loss of  2.6M comparable (3mths 2019).
  5. Cashflow from operations for the quarter in 2020: 12.9M positive vs  2019:  0.
  6. Observations:
    1. Revenue of Liongold remained stable before and after the Blumont saga
    2. LTM net income has recovered from a max loss of 60m to positive 4m (latest 2 qtrs). – Signs of turnaround.
    3. Balance sheet – healthy net assets due to Yaoo capital injection in 2019.

Noted that Liongold’s operation in Australia is not affected by COVID19 lock down and gold price is expected to be higher in the upcoming quarter.

(detailed points have been discussed in the telegram group, so do join the group to look for the information)

 

Please do your own due diligence as I would consider this company as higher risk due to past track records.

(Disclaimer: Investwhizz has small vested interest at price of $0.002 due to the rise in Gold price).

 

As no trading/investments are guarantee sure win, please do your own due diligence and always look at risk to reward and trade with guaranteed stop loss (private message me to know more).

Past article written on how to use guaranteed stop loss; do private message me in Telegram for me to refer you to IG.

Regards,

Ernest Koh