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The FIRE-Trail | October-November 2020 Newsletter
Updated: Dec 1, 2020
In this article
Introduction
Market Summary
Monthly Forecast | VGS
The Stock to Buy
Ausgrid Electricity Retailer Comparison
Cheapest Bill - All non-green Plans
Cheapest Bill - Green Plans
Cheapest Bill - GreenPower Plans
Cheapest Interest Rates
Did you know?
Upcoming events that may impact the market
Introduction
A bit of a weird market wrap-up due to timing of this write up. This is basically a wrap up for October and November (work in progress) with a technical analysis forecast for VGS for December before finishing up with a stock pick.
Market Wrap-Up
While some other countries such Europe, UK and US had to reimpose a second wave of COVID-19-induced lockdowns, Australia by comparison had it easier. Victoria did an amazing job to recover and now SA looking to do the same. As a result, the Australian economy is expected to continue its steady recovery from the economic effects of the virus. This recovery is evident in the 1.9% rise in the ASX 200 Index in October.
The resurgence of global equities seems to be driven by the expectation of more relaxed monetary policy, sharper economic recovery and the hopes of vaccine in the near future.
European was greatly affected due to the restriction (-5.4% overall) with Germany especially, falling 10% due to it's GDP growth falling behind France, Italy and Spain by more than 8%.
UK is down ~3.8% with a spike in coronavirus infections and Brexit being the key issues. 9% of the UK workforce is still on furlough .
Emerging markets up >2%. China equities performed the best in October, moving sharply up by 5%. This is due to the restriction lifting without any significant increases.
Overall, global equities is down more than 2% and the US is more less the same with PMI below September levels, inaction on a second fiscal bill, market adopting a wait and see approach with the imminent US election, and coronavirus cases reaching record levels (~81k/day) the main drivers.
Monthly Forecast | VGS: The Bulls March On
VGS has seen a healthy rise in trend for a long time now, and it doesn't look like it’s stopping soon. Of course, there will be ups and downs, but the overall bias of the stock remains upward trending. So you have the backing of the trend if you are looking to buy.
Let’s take a closer look at the weekly and daily charts for the best trade entry positions.
Be mindful when you are looking to make any purchase(s) right now. VGS is close to the resistance level of the ascending price channel, and price could likely retrace to at least halfway through the channel. You could buy at this level, but you could also wait to see if the price would hit the support level of the price channel.
Another potential buy level is on the support and resistance level of 81.4, where price has constantly bounced beneath and above. Check out the recent history of VGS from December last year. You will notice that the support/resistance level has been pivotal. So, it would make sense if price made a retracement to that level before continuing the uptrend.
There is yet another potential buy level for the VGS, and it is revealed by the Fibonacci retracement. In recent weeks, VGS has made retracements to 0.618 and 0.786 Fibo levels, and we might be headed for one of those levels soon if price retraces from the resistance level of the ascending price channel.
While it is possible that price may face retracement, it is also possible that a breakout occurs, and price ends up on the upper side of the channel. Should this happen, it is another opportunity to buy.
For Sellers
There is nothing to sell in the long term on VGS at the moment. In fact, there hasn't been in a long time. But now that price has hit the resistance of the uptrend channel, you could look to go short on VGS in the short term. Don’t expect much, however, as price might just make it halfway through the channel before continuing its journey upwards. Price may also touch just below the support levels or close to the support of the price channel.
There is no way to be certain about what the market would do. But in any case, I would advise you to refrain from shorting VGS for the rest of November. Wait for the bulls instead. However, if your fingers are itching to make a trade, go short now (close to the top of the resistance level of the price channel) and take your profit midway through the channel.
For Holders
If you are holding a bullish position on the VGS, your story is simple. There is no reason to get out of the trade. Price might take a short dip, but it looks very likely to continue its major uptrend.
VGS Buy and Sell Levels
Wait for price to at least come down to the middle of the channel before you enter a buy position on VGS. But if price breaks the resistance level of the ascending price channels, look to enter a buy above the resistance.
Potential VGS buy levels: 83.00, 81.4, 80.8, and 79.8.
The Stock To Look Out For
The pandemic has caused many stocks to take a dive in recent months. A consequence is that many stocks are forced into buy zones, as they are priced cheaper than they would normally be. Unfortunately, not all of them will recover, so we can’t just pick a random stock to buy just because it’s selling cheap right now. But there is one stock worth keeping an eye on. It’s the telecommunications giant, Telstra Corporation Ltd (ASX: TLS).
TLS has been steadily rising in the past weeks and it is still yet to reach its 52-week peak, which it falls short of by 22% at the moment. Besides that, the leadership has plans of fracturing the company into three entities to put the company in a better position to enjoy likely monetization opportunities. If this happens, the TLS stock would pack more value for its shareholders.
How I can save you money this month
Electricity Retailer Comparison - Ausgrid
I've done this very quickly to encourage people to check their electricity bill because there are always better valued options. I'm using flat tariff and 5000kWh/year as my assumption as this is considered the average in this area. If you want to check out the comparison for your area, usage and tariff type please click here.
Please note that Vic, SA, WA, Ergon (network) and Tassie have not been added yet.
The rankings will change depending on your network area, actual usage, usage profile and tariff type.
Your energy bills are generally the top 3 or so expense you're likely to be paying so please don't hesitate in giving your current retailer the boot. It's easy and most sign-up takes just a few minutes. The only cost is generally the final read which can vary between $12 in Ausgrid to like $90 in ACT. Check with your current retailer before you churn.
Cheapest Interest Rates in the Market
*The rates are quoted based on a borrowing amount of $500k. Higher borrowings may attract greater discounts.
The above rates were brought to you by Shanker Ramakrishnan, Director of SR Business & Finance Consulting Pty Ltd. Ramakrishnan is a qualified Economist holding Bachelor & Master Degrees in Economics. He is an accredited Finance Broker with the Finance Brokers Association of
Australia (FBAA), and holds a Certificate IV in Financial Services, and a Diploma of Finance & Mortgage Broking Management. Ramakrishnan is an experienced & Successful Multi-Millionaire Investor across Residential Property, Commercial Property, and Self-Managed Super Fund Investments.
Contact Shanker Ramakrishnan at SR Business & Finance Consulting Pty Ltd if you want more details Email: shanker.business.finance@gmail.com.
Did you know?
Warren Buffett bought his first stock when he was 11 years old and earned $53k by the time he was 16. 99% of his wealth came after he turned 50. He spends 80% of the day reading and he rarely reads emails.
Upcoming events that may impact the market
1 Dec - RBA Rate Statement, Current Account
3 Dec - Retail Sales m/m
7 Dec - ANZ Job Advertisements m/m
8 Dec - NAB Business Confidence
9 Dec - Westpac Consumer Sentiment
17 Dec - Employment Change/Unemployment Rate
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