Chart of the Day: WiseTech sets up for 10pc swing - but which way?

WiseTech is a behemoth these days, no two ways about it.

On any given day in the last few months, it has weighed in at a market cap in the order of $10 billion.

Underlying the wonderful bullish trends contained within the last decade, there is some genuine volatility that one might seek to capture if so inclined.

There has also been the creation of the WAAAX index with a view to focussing greater attention on the Aussie tech sector.

As can be seen from this two-year chart, there is a great uptrend in play that began with the COVID-inspired shake-out of March last year, before we all realised that pandemics drive us closer to our machines and not the other way around.

The uptrend was touched in August 2020, and again last month in January 2021, and then yesterday’s price action gives us another touch and a close at a value of 2955c.

There should be a trade in WTC in either direction depending on how it responds to this critical level.

A hold of the uptrend would bring recent highs of 3300c back into play, however should it fold, the first target may well be a test of the simple 200-day moving average at around 2700c.

All eyes on the backing up of yields in the States and in particular the 10- and 30-year bonds. Should the yield curve continue to steepen in the short term, the table is set for a potential short term wash-out in overbought and perhaps over-loved tech names in the US. Should that occur there will be some inevitable spill over into the WAAAX index in these parts as well.

In that event, whether WTC reports well or not, it may find that its presence in such an ‘index’ that is then beset with selling on a macro basis may overwhelm all other rationale.

That’s how it tends to work these days. Factor moves, capital flows, and macro-drivers own the day.

Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is a Corporate Authorised Representative (No. 1284431) of Sanlam Private Wealth (AFS License No. 337927), which only provides general advice.

Collette Capital only makes services available to professional and sophisticated investors as defined by the Corporations Act, Section (s)708(8)C and 761G(7)C.

Learn more at www.collette.capital.