Summary
Phil Anderson reviews the Australian watchlist for January, covering three ASX-listed stocks — AUB Group (AUB), James Hardie Industries (JHX), and Evolution Mining (EVN) — in the context of the Mexican Pete pattern. The primary actionable signal is EVN breaking above the 5.20. Anderson also briefly contrasts Australian and US market dynamics around dividend vs. growth investing as context for why US stocks tend to trend more cleanly.
Key Claims
- Australian tax law favours dividend income, making Australian stocks less likely to trend as cleanly as US growth stocks — confidence: medium
- US stocks tend to trend better than Australian stocks due to the structural incentive to reinvest profits — confidence: medium
- EVN broke above the $5.60 buy point, confirming the Mexican Pete pattern — confidence: high
- Gold sector sentiment is currently bullish, making an exceptionally strong continuation move in EVN possible — confidence: medium
- JHX is being monitored not just for the Mex Pete pattern but as a proxy indicator for the completion (or non-completion) of the real estate cycle — confidence: high
- AUB may be forming a Mex Pete pattern but is described as imperfect and the stock was moving slightly lower at time of writing — confidence: low
- Pyramiding (adding to a position) in EVN is conditional on the chart continuing to develop favourably and remaining in the trade — confidence: high
Mex Pete References
- AUB Group (ASX:AUB) — Possible but imperfect Mex Pete pattern forming. Stock at $28.95 AUD. Moving slightly lower at time of writing; pattern still being monitored. No entry signal given.
- James Hardie Industries (ASX:JHX) — Possible Mex Pete pattern forming. Stock at $53.23 AUD. No entry signal given; being watched primarily as a real estate cycle indicator.
- Evolution Mining (ASX:EVN) — Mex Pete pattern confirmed. Breakout above $5.60 buy point completed the pattern. This is the only active signal in this email.
Stock Picks / Signals
| Ticker | Signal | Entry | Stop Loss | Target / Notes |
|---|---|---|---|---|
| ASX:EVN | Buy / Breakout confirmed | Above $5.60 | $5.20 | Expect potential pause at prior highs; if no pause, considered exceptionally bullish. Pyramiding possible depending on chart development. |
| ASX:AUB | Watch only | N/A | N/A | Imperfect Mex Pete; no entry. Move on if pattern does not build. |
| ASX:JHX | Watch only | N/A | N/A | Possible Mex Pete; also monitored as real estate cycle signal. |
Predictions / Forecasts
- EVN is expected to potentially pause at prior highs as earlier buyers take profits; if no pause occurs, this is flagged as exceptionally bullish given current gold sentiment.
- JHX price action is being used as a forward indicator for whether the real estate cycle is approaching completion — no specific date or price target given.
- Further commentary on gold is flagged as forthcoming in a subsequent communication.
Notable Quotes
“We do not ever guess or try to preempt the pattern.”
“If the stock doesn’t pause at the prior highs, then this is exceptionally bullish. Given the sentiment around gold presently, this is possible.”