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When considering beaten down ASX mining stocks, attempting to identify the definitive low can often lead to considerable losses. Most likely, if you’re following a trend-following strategy, you may already be short on these stocks, primarily when they hit their lowest points.
It’s a common scenario; a stock entrenched in a long-term downtrend either becomes altogether delisted or eventually shifts into an uptrend. Although finding the exact low or peak of a trend is nearly impossible, discerning specific candle patterns and price actions can help mitigate short exposure ahead of a potential trend reversal.
It’s essential to acknowledge that I do not aim to buy at the absolute low. My strategy requires confirmation of a developing long-term uptrend before making any bullish moves. Despite the desire to pick the optimal moment, it’s vital not to be fixated on missing the lowest price. Over the years, I’ve endured significant losses attempting to anticipate these extremes. This commitment to trying to "nail it" is, I realised, an inefficient way to build wealth, both in time and capital.
After a series of disappointments, I resolved to adhere strictly to a trend-following approach, focusing instead on maximising wealth creation rather than being right. This shift required overcoming human instincts to chase trends merely to soothe our egos.
Many investors wrestle with selling losing positions and tend to hold on in the hope that a stock will reverse its downward trajectory. This assumption often stems from a fear of missing out (FOMO) that leads to poor decision-making and further losses.
Instead of fixating on the extremes, I advocate focusing on the prevailing trends, which statistically present the highest probability of success. If you can get the probability component right, profits generally follow.
In the latest ChartWatch ASX Scans, several stocks have transitioned from downtrend to uptrend, among them Iluka Resources (ILU), Mineral Resources (MIN), Fortescue (FMG), Whitehaven Coal (WHC), New Hope Corp. (NHC), and Yancoal Australia (YAL), which recently entered the uptrend list.
Uptrend Scan List
| Company | Code | Last Price | 1mo % | 1yr % |
|---|---|---|---|---|
| Amplitude Energy | AEL | $0.260 | +15.6% | +15.6% |
| AMP | AMP | $1.875 | +28.4% | +68.2% |
| Eagers Automotive | APE | $20.65 | +6.6% | +105.1% |
| American Rare Earths | ARR | $0.370 | +57.4% | +48.0% |
| Fortescue | FMG | $18.85 | +14.2% | +1.3% |
| Iluka Resources | ILU | $6.01 | +51.0% | +10.9% |
This list showcases stocks that have manifested significant upward momentum recently.
Downtrend Scan List
| Company | Code | Last Price | 1mo % | 1yr % |
|---|---|---|---|---|
| Austin Engineering | ANG | $0.305 | -14.1% | -49.6% |
| Appen | APX | $0.890 | -19.8% | +35.9% |
| GQG Partners | GQG | $1.725 | -20.1% | -33.7% |
The stocks listed here exhibit significant bearish trends, underscoring areas where caution may be warranted.
Conclusion
In trading, those who focus on tracking the prevailing trends often find better opportunities than those striving to predict market lows or highs. As always, conducting thorough research before acting on trend signals will provide the best foundation for investment success.
Remember, while the fluctuations of the stock market can be tempting to interpret, it’s the patience and adherence to a sound strategy that ultimately pays off in the realm of investing.
