Kerry Sun from Market Index in today's Evening Wrap, with a bit of TA
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Sandfire deserves a special mention today. A 1.1% gain would be good on any day. It’s absolutely brilliant today.
The pillars of my technical analysis strategy are Trend, Price Action, Candles, Volume and Volatility. Each is discernible from a stock’s chart. The final pillar, Relative Strength Comparative (RSC), considers factors external to the stock’s chart. This is a key advantage of this indicator – it takes into account independent data.
RSC compares the performance of a stock with another security, generally an index relevant to the stock. It’s common to compare a stock’s performance with the performance of the relevant benchmark index. For Sandfire and other ASX stocks, I like to compare their performance to the S&P/ASX 200.
I use a proprietary RSC indicator –
you won’t find it in any of your technical analysis platforms. Also, please don’t confuse it with the Relative Strength Index (RSI) – it’s not even close conceptually, and my research suggests the RSI has little value as a technical indicator – but that’s a story for another day.
Basically, when the RSC (which is the bottom-most indicator in the Sandfire chart above) is green and rising, the stock in question is outperforming the benchmark index. This means that it’s better on up days, and like today, its better when most stocks are getting belted. When this occurs, I like to say, “
It’s in the basket”.
This means it’s in a basket of securities which are going to be bought by active fund managers (not the tag along with the index
passive fund managers) no matter what.
Other than excellent RSC, the Sandfire chart has several other key indicators of strong demand-side control: Short and long term uptrends, higher peaks and troughs (on a closing basis), and predominantly demand-side candles.
8.61 is the nearest point of demand, the short term uptrend remains intact as long as the price continues to close above this level. 9.28 is the nearest point of supply, above there it’s all blue sky.