Market Highlights: Wall Street slips, common mistakes in stock trading, and 5 ASX small caps to watch today

Aussie shares set to track Wall Street lower at the open
CPI report will be the main focus this week
What are the common mistakes for stock traders

Australian shares are poised to track Wall Street and open lower this morning. At 8am AEST, the ASX 200 index futures was pointing down by -0.3%.

On Friday, the S&P 500 fell by -0.23%, the blue chips Dow Jones index was down by -0.31%, and the tech-heavy Nasdaq slipped by -0.1%.

Ford Motor rose 2% after saying it was serious about reaching a deal with the United Auto Workers (UAW) union. The UAW said it would spare Ford more pain, even as it expanded the strike to 38 more facilities run by rivals General Motors and Stellantis.

Arm Holdings fell almost -2% after getting a neutral rating by Susquehanna Financial, following the Sell rating by Bernstein last week.

Amazon fell modestly after reports the Federal Trade Commission will be suing the company for antitrust violations next week.

Meanwhile, two US Fed Reserve officials – Fed Bank of San Francisco President Mary Daly and Boston Fed president Susan Collins – said that at least one more interest rate increase is possible.

Back home, the focus this week will be on the CPI data on Wednesday, as well as job vacancies and retail trade data on Thursday.

Mistakes to avoid when trading stocks

While predicting market trends is an essential exercise for any trader, it is crucial to recognise these common mistakes, warns market expert Rajiv Dogra of ClearTax.

Over-reliance on a single indicator

“No single indicator can highlight a complete market picture,” says Dogra.

“For instance, while using the Relative Strength Index (RSI) alone can underscore overbought or oversold conditions, it can’t indicate the trend’s strength or direction.”

Now read: Hot Money Monday: One potential strategy to beat the market, and how to spot oversold stocks

Ignoring market volatility

Instead of looking at volatility, some traders base their decisions on price movements alone.

“It is important to note that market volatility is a significant ingredient in taking stock, whether a trend is strong or weak,” said Dogra.

“In this regard, tools such as Average True Range (ATR) can aid in measuring volatility.”

Being impatient

Dogra believes impatience is a psychological trap that traders are likely to slip into.

“Any form of impulsive move based on partial signals can drive one to losses.

“When it comes to trading, patience remains the key,” he said.

Overtrading

The rule of thumb, according to Dogra, is that trading more does not necessarily result in earning more.

“Such a practice is likely to lead to significant losses due to spreads and commissions.

“Individuals should pick their trades wisely and not be carried away by overtrading.”

Unadaptive to market changes

Traders have to be dynamic, because stock markets consistently change.

“The idea of holding on to past trends without adapting to new changes could drive an individual toward potential losses,” said Dogra.

He adds that it’s crucial to stay informed about market changes, and adapt the trading strategies based on this.

In other markets …

10-year US bond yields retreated by 6bp, coming off the highest level since 2007.

Gold price traded flat at US$1,925.87 an ounce.

Crude prices rose +0.5%, with Brent closing at US$93.73 a barrel. Oil traders have been closely watching developments after Russian media said that Russia’s Transneft suspended deliveries of diesel to the key Baltic and Black Sea terminals on Friday.

Iron ore futures rose +0.4% to US$121.33 a tonne.

The Aussie dollar gained +0.5% to US64.43c.

Bitcoin meanwhile fell -0.3% in the last 24 hours to trade at US$26,504.

5 ASX small caps to watch today

Adavale Resources (ASX:ADD)
Adavale has applied for an exploration licence to expand its footprint in South Australia . The application area covers 591km2 which importantly includes a large recognisable alluvial outwash system shedding from the central part of the Flinders Ranges. The new licence, if approved, will take Adavale’s tenure from 1,078 km2 to 1,669km2.

Lucapa Diamond (ASX:LOM)
Seven samples taken from 3 kimberlite targets in the Lulo concession have been processed. The best result was from approximately 1,460m3 of material from Kimberlite L440. The sample recovered 8 diamonds, with the largest weighing 2.04 carats. This is the 14th kimberlite to be found to be diamondiferous, with two more geophysical targets confirmed as kimberlites.

Redflow (ASX:RFX)
Redflow announced that the U.S. Department of Energy (DOE) has approved funding for a 34.4 MWh long-duration energy storage (LDES) microgrid project in which Redflow has been named as the battery provider. The project will form part of the DOE’s US$325m LDES program which seeks to advance critical clean energy technologies.

AdAlta (ASX:1AD)
AdAlta reported results of dose simulation studies which support the potential efficacy of AD-214 in fibrotic disease at planned Phase II doses. The simulations also highlight the possibility that AD-214 could be delivered subcutaneously at lower doses. These results will reduce Phase II risk, and significantly enhance partnering potential says the company.

Australian Mines (ASX:AUZ)
AUZ announced the appointment of Andrew Luke Nesbitt as CEO of the company, effective 2 October 2023. Nesbitt has over 25 years of experience in the natural resources sector, and has held positions with both De Beers and Goldfields. He is also the former CEO of Resource Mining Corporation (ASX:RMI).

At Stockhead we tell it like it is. While Adavale Resources is a Stockhead advertiser, it did not sponsor this article.