ThinkTechnical 14 July

The benchmark S&P ASX200 is broadly lower today. Often, it is sessions just like this one that technical analysts prefer, as it only highlights the outperformance of certain stocks.

Relative strength versus a benchmark demonstrates that regardless of market conditions, the valuations of these stocks remain attractive to buyers who stand ready to purchase despite broader market nerves.

This is a significant vote of confidence in the future prospects of these stocks - both from a price performance, and business outlook perspective.

In today's ThinkTechnical, we'll review three stocks that are exhibiting significant relative strength compared to the ASX200. Each stock sees its share price rising today, and each is in a well-defined short term and long term uptrend. Importantly, each stock also looks poised to move higher.

 

A2M is in well-defined short term uptrend as evidenced by correct order, and rising 21-34 EMAs, and a well-defined long term uptrend as evidenced by correct order and rising 144-233 EMAs.

The price stalled at the 18 June high of $20.05 which coincides with psychological static resistance from the $20 round number. This is no surprise given the significance of $20 in investors' minds.

When such a key price level is encountered, traders should expect a retracement from this level as pent up supply hits the market.

It is how the price then responds which gives the best clues as to the future prospects of a stock.

Ideally, we'd like to see a qualified first test of this level before entering. This removes some of the supply at the key static resistance level, and therefore makes it easier for prices to appreciate post-break out.

This occurred at the 7-8 July matching highs of $20.

Static support will be encountered at the 20 April high of $19.23 which coincides with the 10 July low of $19.19. 

Dynamic support will be encountered in the zone defined by the 21-34 EMAs between $19 and $19.20.

Once $20.05 is breached, targets are open ended as A2M will be pushing into new highs.

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders will have to consider buying on a move above the 18 June high of $20.05.

 

ANN is in well-defined short term uptrend as evidenced by correct order, and rising 21-34 EMAs, and a well-defined long term uptrend as evidenced by correct order and rising 144-233 EMAs.

For the last two weeks, the price has been consolidating below the 1 July high of $38.26 in a well-defined flag pattern.

Static support will be encountered at the 9 July low of $36.66 which coincides with the 18 June high of $36.52.

Dynamic support will be encountered in the zone defined by the 21-34 EMAs between $36.50 and $37.30.

Once $38.26 is breached, targets are to static resistance at the psychological $40 round number, but are open ended from there as ANN will be pushing into new highs.

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders will have to consider buying on a move above the 1 July high of $38.26.

 

FMG is in well-defined short term uptrend as evidenced by correct order, and rising 21-34 EMAs, and a well-defined long term uptrend as evidenced by correct order and rising 144-233 EMAs.

The last time we covered FMG was in the ThinkTechnical of 3 July. Since then it has pushed nicely out of the short term dynamic support zone defined by the 21-34 EMAs.

It now appears to be breaching the key static resistance from the 9 June high of $15.25. This also clears the static resistance from the psychological $15 round number and opens the way for higher prices.

Static support will now be encountered at $15.25, and then at the dynamic support zone defined by the 21-34 EMAs between $14.40 and $14.80.

Targets are open ended as FMG is pushing to new highs.

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders will have to consider buying at current prices.