Evening Wrap: ASX 200 closes tough week on firmer footing, lithium and uranium stocks surge as gold slides again

It was a solid close to a topsy-turvy week of trading on the S&P/ASX200. The day's gain and the week's gain – as unlikely at that might have seemed a few times during the week – will be warmly welcomed by Aussie investors.

It could have been far, far worse.

The pressure that had been applied by ratcheting higher market interest rates finally boiled over Thursday and Friday, helping interest rate sensitive sectors like Discretionary, Property, and Technology.

There were even greater highlights, though, particularly in lithium and uranium stocks which logged stellar gains.

This could not be said for gold stocks, which like the price of the commodity itself this week, experienced an abrupt about face in fortunes.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 42.0 points higher at 7,629, 0.55% from its session low and just 0.15% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 212 to 70.

For the week, the XJO finished up 53.1 points or 0.7% higher. This was 0.96% above the week’s low of 7,556.5 and 0.46% below the week’s high of 7664.1.

It was all about “interest rate sensitives” today. Key benchmark bond yields fell for a second day, and this put the most interest rate sensitive sectors of Consumer Discretionary (XDJ) (+2.0%), Real Estate Investment Trusts (XPJ) (+1.6%), and Information Technology (XIJ) (+1.2%) at the top of the sector performance table.

Guess which sector was the worst – go on! Yep, the Gold (XGD) (-1.7%) sub-index made it three out of five for worst sector of the day this week. No major for reason today's drop, but gold prices have been sharply lower through the week.

Now, given gold isn't one of the 11 official ASX sectors, I get to type this line again: All 11 of the major ASX sectors were up today. It has been a topsy-turvy week!

Gold stocks were again in the doldrums today

As for highlights of the session, I'm going to award second place to ASX lithium stocks. A not too shabby at all performance today as can be seen in the table below. I couldn't find any obvious drivers, but I can say it's not lithium minerals prices related – those markets have been closed since Wednesday for May Day Holidays in China.

Don't try to understand it. Just enjoy it.

How about those lithium stocks today!?

First place for session highlights has to go to resurgent ASX uranium stocks. The reason for the gains here are far more obvious, as I've been reporting in recent Evening Wraps vis-a-vis the the pending US ban on Russian uranium imports.

Given my recent coverage of the fundamentals, as well as my extensive coverage of the uranium chart, I thought it timely to investigate a couple of ASX uranium stocks in today's ChartWatch (below).

If you read my article on the Russian ban (you should!), there's a clear theme of raw uranium imports versus enriched uranium product imports into the US. For this reason, I thought I'd tackle uranium tech company Silex Systems (ASX: SLX) which is trying to commercialise its enrichment process, and raw uranium producer Boss Energy (ASX BOE).

Uranium stocks were again hot, thermonuclear meltdown hot!

ChartWatch

High Grade Copper COMEX

Two of the last three candles are black, indicating supply has arrived

Just a heads up about a couple of nasty supply side candles which have appeared in the last three candles on this chart. Supply has arrived, probably not coincidently, just below a major point of supply from June 2022 in the form of 4.731.

The question is now is: What does demand do about it?

We will get our answer, as we usually do, from the candles. White candles around the next point of demand at 4.396 (which coincides with the dynamic support of the short term uptrend ribbon), would indicate the supply pulse has run its course and investors are buying the dip.

A close below 4.396, particularly if it comes with a full black candle, opens up the possibility of deeper retracements.

Also watch the price action from here – we don’t want to see a lower peak set below 4.695 as it would indicate supply reinforcement.

At this stage, given the short and long term uptrends remain intact, those two supply-side candle culprits merely indicate the end of the beginning of this copper uptrend – not necessarily the beginning of the end!

Silex Systems (ASX: SLX)

Top of the range, what happens next is crucial

The silex chart shows a well-established long term uptrend, but like many of the major ASX uranium stocks, also a prolonged period of extreme volatility within a wide range between $4.40 and $5.78 over the last few months.

Technical analysts like to see broad ranging patterns after a strong appreciation as they can often provide a great foundation for future move higher. For this reason, they’re often referred to as “base patterns”.

Ideally, a base pattern has a tighter range, indicating less indecision among market participants. I’m not sure that’s the case here, given +30% range in SLX’s base pattern. I suggest SLX is a polarising stock across the demand and supply sides.

Still, with the short term uptrend reestablishing, a recent string of strong demand-side candles, and the dispensing with of the 5.35 and 5.48 points of supply, there’s plenty to indicate the demand-side is again firmly in control of the price.

The supply-side will likely have an impact at 5.78 – no doubt there’s a few investors who regret buying up there back in February – and today’s move gives them the chance to get out with a hard-fought break even.

Candles here are going to be crucial. We want to see very little supply-side response around 5.78, so no black candles and or upward pointing shadows.

The opposite of this is white candles and or downward pointing shadows, indicating supply hasn’t materialised at 5.78, and that the demand-side remains motivated. In this scenario, there’s every chance SLX can push higher into what could be a supply vacuum given there aren’t any points of supply above 5.78 within the last decade.

5.35-4.48 is now the key demand zone. I suggest that as long as the SLX price remains above this zone the short term uptrend remains intact.

Boss Energy (ASX BOE)

Potentially a solid base pattern from which BOE can mount a challenge on recent highs

Is this the tighter base pattern I was referring to? If we only consider the period after the dip to the long term uptrend ribbon – which I should mention has been nothing less than perfect in defining dynamic support – I think it is.

Even better, today’s close has finally prised open the pesky supply of 5.06-5.20. There’s a strong possibility this zone now acts a solid foundation from which BOE price might mount a challenge on 6.12.

Below 5.06-5.20, the short term trend ribbon should offer dynamic demand. I suggest the demand-side is in control as long as the BOE price continues to close above both zones of demand.

6.12 is the logical upside target, but their may be some nagging supply around the top of the massive supply-side pulse demonstrated by the 9 February candle (you can’t miss it – it’s the big black one with the gap down!).

Economy

Today

• There weren't any major economic data releases in our time zone today.

Later this week

Friday

• 22:30 USA Non-Farm Employment Change April (+243,000 forecast vs +303,000 March); Unemployment rate April (3.8% forecast, no change); Average Hourly Earnings April (+0.3% forecast, no change)

Saturday

• 00:00 USA ISM Services PMI April (52.0 forecast vs 51.4 March)

Latest News

Interesting Movers

Trading higher

• +11.6% Clarity Pharmaceuticals (CU6) - Continued positive response to Tuesday's Quarterly Activities/Appendix 4C Cash Flow Report plus Complete response with Cu-67 SAR-bisPSMA, rise is consistent with prevailing short and long term uptrends 🔎📈

• +9.8% Block (SQ2) - Quarterly Report quarterly period ended March 31, bounced off long term uptrend ribbon 🔎📈

• +7.3% Vulcan Energy Resources (VUL) - No news, generally stronger ASX lithium sector today, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up, closed above long term trend ribbon 🔎📈

• +7.2% Silex Systems (SLX) - No news, generally stronger ASX uranium sector today, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up, closed +10 year high 🔎📈

• +6.5% Omni Bridgeway (OBL) - Change of Auditor

• +6.1% The Star Entertainment Group (SGR) - Suitability Investigation - The Star Brisbane

• +5.5% GQG Partners (GQG) - Quarterly Dividend, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up, closed all-time high 🔎📈

• +5.5% Audinate Group (AD8) - No news, generally strong ASX tech sector today, rise is consistent with prevailing long term uptrend, bouncing above long term uptrend ribbon, today's close resumes rising peaks and rising troughs 🔎📈

• +5.1% Mayne Pharma Group (MYX) - No news, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up, closed +3 year high 🔎📈

Trading lower

• -5.6% Evolution Mining (EVN) - Analyst Roundtable Presentation, generally weaker ASX gold sector today, closed below short term uptrend ribbon 🔎📉

• -4.6% Resolute Mining (RSG) - No news, generally weaker ASX gold sector today

• -4.3% Peninsula Energy (PEN) - No news, rare loser in the ASX uranium sector foday - unlucky - or supply > demand fro a reason!? 🤔

• -4.3% Strike Energy (STX) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.9% Collins Foods (CKF) - No news, notable loser in stronger Discretionary sector today, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down, today's close resumes falling peaks and falling troughs 🔎📉

• -3.5% Imugene (IMU) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.5% Nanosonics (NAN) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

Broker Notes

• Bapcor (BAP)

  • Retained at outperform at Macquarie; Price Target: $5.25 from $6.90

• Chalice Mining (CHN)

  • Retained at buy at Bell Potter; Price Target: $5.00 from $5.40

• Clarity Pharmaceuticals (CU6)

  • Retained at buy at Bell Potter; Price Target: $4.00 from $3.90

• Domain Holdings Australia (DHG)

  • Retained at neutral at Goldman Sachs; Price Target: $3.50 from $3.60

• DUG Technology (DUG)

  • Initiated at overweight at Wilsons; Price Target: $3.58

• Fletcher Building (FBU)

  • Retained at underperform at Macquarie; Price Target: NZ$3.23 from NZ$3.46

• Helloworld Travel (HLO)

  • Upgraded to buy from accumulate at Ord Minnett; Price Target: $3.10 from $3.16

  • Retained at buy at Shaw and Partners; Price Target: $3.80

• Iress (IRE)

  • Retained at neutral at Macquarie; Price Target: $8.85 from $8.55

• Karoon Energy (KAR)

  • Retained at outperform at Macquarie; Price Target: $2.50

• Kelsian Group (KLS)

  • Retained at overweight at Barrenjoey; Price Target: $6.60 from $8.70

• Matrix Composites & Engineering (MCE)

  • Downgraded to hold from buy at Bell Potter; Price Target: $0.42

• National Australia Bank (NAB)

  • Retained at buy at Goldman Sachs; Price Target: $34.04 from $33.89

  • Downgraded to underweight from hold at Jefferies; Price Target: $27.00

  • Retained at overweight at JP Morgan; Price Target: $34.30 from $33.70

  • Retained at underperform at Macquarie; Price Target: $32.50

  • Retained at equal-weight at Morgan Stanley; Price Target: $31.50 from $30.60

  • Retained at sell at UBS; Price Target: $30.00 from $28.00

• Nine Entertainment Co. Holdings (NEC)

  • Retained at buy at Goldman Sachs; Price Target: $2.00 from $2.10

• Northern Star Resources (NST)

  • Retained at outperform at Macquarie; Price Target: $17.00

• News Corporation (NWS)

  • Retained at buy at Goldman Sachs; Price Target: $45.30 from $45.00

• Pro Medicus (PME)

  • Initiated at buy at Goldman Sachs; Price Target: $134.00

• Pexa Group (PXA)

  • Retained at neutral at Goldman Sachs; Price Target: $13.10 from $13.10

  • Retained at neutral at Goldman Sachs; Price Target: $13.40

• REA Group (REA)

  • Retained at buy at Goldman Sachs; Price Target: $202.00 from $201.00

• Wesfarmers (WES)

  • Retained at buy at Goldman Sachs; Price Target: $68.80

• Woolworths Group (WOW)

  • Retained at buy at Goldman Sachs; Price Target: $39.40 from $40.40

  • Retained at outperform at Macquarie; Price Target: $35.00

• Xero (XRO)

  • Retained at outperform at Macquarie; Price Target: $154.60 from $152.60

Scans