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Technical update: 12 February 2018

Violeta Todorova

Wesfarmers (WES) – approaching support

WES has been trading sideways over the past two years fluctuating between $38.62 and $46.06 and in our last update on December 17, 2017 we discussed the likelihood of selling pressure arising around $45.50. The sharp selloff has pushed the price close to its band of support between $38.62 and $39.52 where initial buying interest is likely to arise. The RSI indicator has reached oversold territory suggesting that the price could bounce soon.

Given the proximity to key support and the oversold momentum readings, we would be looking to accumulate the stock around $40.00.

Apollo Tourism & Leisure (ATL) – tracking well

The rally from the December 2017 low has lost momentum over the past month and the price has been trading sideways, fluctuating between $1.70 and $1.93. Despite the general market weakness over the past week, ATL's share price held steady which shows that market sentiment is very strong.

We see high probability of the price breaking above resistance of $1.93 and we lift our price target to $2.05.

Tabcorp Holdings (TAH) – accumulate

In our last update on November 20, 2017 we discussed the overbought nature of the stock and the likelihood of the rally stalling. A sharp selloff has unfolded over the past two months and the current price action is approaching its previous resistance of $4.40 where buying interest is likely to arise. The RSI indicator has entered oversold territory suggesting that the price is likely to bounce soon. Although at this point there is no reversal signal on the daily chart we would be looking to accumulate the stock around $4.40 - $4.50.

The potential upside price target is $5.00.

Fortescue Metals Group (FMG) – double blessed buy

The decline from the February 2017 high has lost momentum over the past seven months and the price has been trading sideways, fluctuating between $4.51 and $6.07. Last month the RSI indicator broke upwards from its sideways market range resistance, suggesting that higher prices are likely to unfold in the months ahead. The first potential upside price target is $5.50. Over the longer term, levels to $6.00 are achievable.

We are comfortable buying the stock around current price levels.

Mineral Resources (MIN) – buy

MIN has been trading in an up trend over the long term which is still firmly intact. The recent pull back retraced close to its previous support of $16.10 where support appears solid and is likely to hold. The RSI and the MACD indicators are turning positive from oversold territory suggesting that the price is likely to trade higher in the near term.

The initial upside price target is $21.25. Over the long term, higher prices appear achievable.

More information

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Disclaimer(s): Analyst may own shares in some or all of the companies mentioned.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.