Technicals | May 30 2023
This story features RIO TINTO LIMITED. For more info SHARE ANALYSIS: RIO
By Michael Gable
Last week, we continued to see dips getting bought in the US market. Just like at the start of May, a few sharp days down were quickly overcome by buyers.
However, once again, we see the confusing argument in the media that share markets should not be so high because of all the "problems" that lie ahead. It is confusing because the bearish case is that only a handful of stocks are leading the market higher. The argument implies that most stocks have therefore not rallied since the start of the year.
So, in other words, most stocks are not rallying, which negates the bearish argument that stocks are providing a "bear market rally".
Well, 90% are not rallying. Only a handful of stocks are rallying. This means that the bearish argument is actually a bullish argument.
It is telling us that outside of a handful of tech stocks, most stocks are down at attractive levels and are not overbought and are therefore ready to join the rally when the time is right.
In terms of the local market, we continue to consolidate. Iron ore stocks had a rough week, but this reminds me of November 2022 at peak bearishness when they turned around and recovered strongly.
The next few weeks could therefore see these commodity stocks outperform and help lift the market higher.
In this week's report, we have a chart on Rio Tinto ((RIO)).
Last week, we saw RIO break under support near $108 before rebounding back above it. Momentum indicators are also suggesting a bottoming out down here.
This should be the early signs of a turnaround in RIO's share price and current levels are an early buying opportunity.
A further push beyond $111 would add to the bullish case that RIO is ready to trend higher again and would provide investors with an attractive risk/reward if RIO were to head back towards its recent peak.
Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services.
Michael is RG146 Accredited and holds the following formal qualifications:
• Bachelor of Engineering, Hons. (University of Sydney)
• Bachelor of Commerce (University of Sydney)
• Diploma of Mortgage Lending (Finsia)
• Diploma of Financial Services [Financial Planning] (Finsia)
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2
Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
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