ThinkTechnical 28 July

In today's ThinkTechnical we'll take a look at the technical picture for 3 highly prospective materials focussed stocks. 

It was a tough session today, with most sectors falling back sharply from their morning highs. One notable exception was the Materials Sector (XMJ). Apart from a tiny 0.03% gain in the Telco Sector (XTJ), the XMJ was the only strong performer of note on the Aussie market, rising 0.9%.

The reversal in prices in most stocks today is disturbing. It is for this exact reason we also decided to push back the release of today's ThinkTechnical as late as possible. We wanted to see how the stocks we were tracking finished the session.

Typically, stocks which outperform the broader market, and in particular, that are able to close near their highs in a weaker market, are worth a closer inspection.

So, let's look at the three best technical picks in the market today in ALS Limited (ALQ), Boral Limited (BLD), and Brickworks Limited (BKW).

 

ALS Limited is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. The long term trend is undefined, as evidenced the 144 EMA located below the 233 EMA but with each EMA rising. It is likely that these EMAs cross in the near future, therefore initiating a new long term uptrend.

Static resistance will be encountered at the 20 Feb 2020 high of 10.20.

Static support will be encountered at the 21 Jul 2020 high of 7.91, and also the 27 Jul 2020 low of 7.52, which coincides with the 04 Jun 2020 high of 7.47. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 7.20 and 7.40.

The dynamic long term support zone is defined by the 21-34 EMAs, projected between 7.25 and 7.45. Given the long and short term dynamic support zones coincide, there is an increased probability of the price continuing to rally out of this price zone.

Targets are to the 20 Feb 2020 high of 10.20. Beyond 10.20, ALQ is at all-time highs, and therefore targets are open ended.

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 may have to consider buying on a breach of today's high of 8.08.

 

Boral Limited is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. The long term trend is undefined, as evidenced the 144 EMA located below the 233 EMA but with each EMA rising. It is likely that these EMAs cross in the near future, therefore initiating a new long term uptrend.

Static resistance will be encountered at the 26 Aug 2019 low of 3.93, which coincides with the 09 Jun 2020 high of 3.92, the 23 Jun 2020 high of 3.94, and also the 02 Jul 2020 high of 3.95. Whenever multiple resistance factors coincide, the market response at the zone defined by these factors tends to be stronger.

Static support will be encountered at the 27 Jul 2020 low of 3.71.

Note that static support at 3.71 coincides with dynamic short term support expected to be encountered in the zone defined by the 21-34 EMAs, projected between 3.67 and 3.76. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

The dynamic long term resistance zone is defined by the 21-34 EMAs, projected between 3.67 and 3.94. This area is clearly impeding higher prices. Note though, if the price can trade above this zone, it should act as a significant zone of support going forwards.

Targets are to the 16 Dec 2019 low of 4.42. The next key target is 5.29. 

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 may have to consider buying on a breach of today's high of 3.96.

 

Brickworks Limited is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. The long term trend is undefined, as evidenced the 144 EMA located below the 233 EMA but with each EMA rising. It is likely that these EMAs cross in the near future, therefore initiating a new long term uptrend.

Static resistance will be encountered at the 23 Jul 2020 high of 16.93, and then at the 23 Jan 2020 high of 20.74.

Static support will be encountered at the 03 Jul 2020 high of 16.19, which coincides with the 27 Jul 2020 low of 16.08.

Note that static support at 16.19 coincides with dynamic short term support expected to be encountered in the zone defined by the 21-34 EMAs, projected between 15.90 and 16.20. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

The dynamic long term support zone is defined by the 21-34 EMAs, projected between 15.85 and 16.20. Given the long and short term dynamic support zones coincide, there is an increased probability of the price continuing to rally out of this price zone.

Targets are to the 23 Jan 2020 high of 20.74. Beyond 20.74, BKW is at all-time highs, and therefore targets are open ended.

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 may have to consider buying on a breach of 16.93.

 

Not covered in today's ThinkTechnical, but worth further investigation (in alphabetical order):

AKP
ANN
ASB
BSL (Materials)
FMG (Materials)
ILU (Materials)
JHG
MCR (Materials)
OPC
PAR
PLS
REA
SEK
SHL
SLC
TPW