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ASX: three stocks to watch


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As we enter the second week of trading for 2023, Tony Sycamore explores three stocks to watch.

1673235071428.jpgSource: Bloomberg
 

 

 Tony Sycamore | Market Analyst, Australia | Publication date: Monday 09 January 2023 

ASX 200 overview

In its first week of trading for 2023, the ASX 200 added 71 points (1.01%) to close at 7110. A respectable performance after a violent sell-off rocked the market on the first day of the New Year (Tuesday).

It’s not uncommon for market moves to be exaggerated during the first week of the New Year with many traders still on holiday and volumes light. The stunning reversal higher that followed during the remainder of the week, led by the heavyweight Materials Sector (+3.03%), keeps the uptrend in the ASX 200 index intact.

At a sector level, the Materials Sector is well placed to take advantage of an expected rebound in China’s growth in the second half of 2023 following its recent re-opening. Support will also come from the Chinese government’s stabilisation of its property sector and higher commodity prices, including iron ore which climbed 2.4% on Friday to $119.75 p/t.

In the article below, we look at three ASX Materials Stocks which need no introduction and appear to have broken higher, supported by the tailwinds noted above.

  • BHP

BHP soared by 4.12% last week, and its share price is now up over 30% from its October 2022 $36.93 low. This week it has opened above the trendline resistance at $47.70, from the July 2021 high of $48.57.

Presuming BHP can maintain the break above $47.70 and then takeout July 2021's $48.57 high, it opens up a test of the next upside resistance level at $50.00, before $52.00.

BHP weekly chart

1673235121763.pngSource: TradingView
  • Rio Tinto

The share price of Rio Tinto climbed by 2.77% last week, and its share price is now up over 38% from its October 2022 $87.81 low. This week's early trading appears to have confirmed last week’s break above the trendline resistance at $117.00, drawn from the July 2021 high of $137.33.

Presuming Rio Tinto can maintain an altitude above $117.00 and iron ore holds onto its recent gains, look for the share price of Rio Tinto to test the next upside resistance level at $128.55, coming from the March 2022 high.

Rio Tinto daily chart

1673235135871.pngSource: TradingView
  • Fortescue Metals

The share price of Fortescue soared by 6.29% last week, and its share price is up over 30% from its November $$14.50 low.

In early trading this week, the share price has fallen over 2.8% from its Monday morning high of $22.15 following news of the resignation of FMG's long-serving Chief Financial Officer, Ian Wells. Nonetheless, the share price of FMG remains above the trendline resistance at $21.50, drawn from the July 2021 high of $26.58.

Providing FMG can hold above support near $20.00, and iron ore holds onto its recent gains, look for the share price of FMG to test the next upside resistance level at $22.99, coming from the February 2022 high.

Fortescue Metals daily chart

1673235158208.pngSource: TradingView

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