Phat squiggly lines: Financials and resources lead the way

Phat squiggly lines is where pro traders get a technical take on the stock markets – with Kieran Neeson, Opentrader's in-house trading guru.

Market overview

The ASX 200 (XJO.ASX) managed to eke out a gain of 0.3% today led by the major financials while resource stocks had a well-earned breather after a stellar start to the year.  

From a technical standpoint, the market is still hovering around the 50-day moving average which is continuing to be a consistent level of support. Volumes are starting to pick up again after the Christmas break as institutional investors and fund managers begin to return to work and reshuffle portfolios. Overall, there's no clear direction for the market in the immediate term and with reporting season kicking off shortly, it wouldn’t surprise to see further consolidation over the coming weeks. 

  1. Short-term resistance in place around recent high of 7620
  2. Market has found support at the 50-day moving average around 7400 and is trading in tight consolidation

Stocks to watch

Fortescue Metals (FMG.ASX)

Top tier iron ore producer Fortescue Metals was one of the best performing ASX top 20 stocks in the last quarter of 2021, rallying an impressive 50% from November 1 2021 to January 14 2022. 

The stock however is looking tired in the immediate term and a fall back to its next support level around $19.20 looks likely in the coming days or weeks. 

Last week NAB made comments about the current US$130 price being unsustainable due to weather conditions improving in Brazil which is home to top three iron ore producer, Vale. The South American giant had been forced to reduce production due to weather conditions which dampened supply in the short-term, helping to push prices higher. The technical picture seems to agree with this outlook so some profit-taking here after such a strong recovery makes sense.  

  1. Short-term top may in place
  2. Next support level around $19.20

BetMakers Technology Group (BET.ASX)

B2B gaming technology provider BetMakers is a stock we covered last last year with good success but has since had a fall from grace, to say the least. It's now down by more approximately 58% since late May 2021 and is starting to look interesting at current levels.

From a technical standpoint the stock is in a strong downtrend and we always try to go with the trend as opposed to against it – as the age old saying goes, the trend is your friend! We don’t like to try to pick bottoms as it’s a difficult and risky game to play... and the more you try to pick bottoms, the more likely you are to end up with smelly fingers! With no debt, over $100m in cash in the bank, recent deal with Caesars Sport Betting in the US set to start generating revenue, and an ever-growing client base, we believe the stock is starting to present decent value down here although we’d be inclined to wait for a buy signal to appear before taking a position.

It's lost nearly half its value without releasing any negative material news, so one has to wonder if we are getting close to a bottom, above comments notwithstanding. The company is due to report over the next six weeks which will undoubtedly be a catalyst for a decent move in one direction or the other.

  1. Begin to accumulate at current price of around $0.68
  2. Next level of support at around $0.58

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