The ASX 200 (XJO.ASX) has sold off aggressively today, dropping more than 2%. This week has been one of the biggest weeks in several years from a macroeconomic and interest rate standpoint, so it’s little surprise to see the market shed some weight.
The RBA raised interest rates for the first time since 2010 and also for the first time during an election period since 2007. The US Fed Reserve raised the cash rate by 50bps this week too which was mainly priced in but has rattled markets nonetheless and signals the first of many rate rises to come.
From a technical standpoint, the market is now sitting at a pivotal support level that needs to hold, otherwise further downside looks likely. We’re struggling to see what upcoming catalysts there are that may push the market higher in the short term, especially with a federal election looming and seasonal historical weakness that typically occurs in May.
We believe now is the time to be an active investor and to be selective with what stocks you add going forward. Having a solid trading plan in place, especially for scalping or short-term trading, can improve results and reduce losses, so traders are encouraged to stick to their trading rules and strategies.
1. Short-term resistance in place around recent high of 7,500
2. Market is now at key support level of 7,214
3. Market is still rangebound although looks likely to retest recent low of 7,000
Graphite miner Black Rock Mining recently completed a placement which will help expedite the production of graphite out of its flagship Mahenge project in Tanzania. Graphite is the single most used material in lithium-ion batteries yet hasn’t had anywhere near the same run as lithium has in recent years. We believe graphite is a sleeping giant and that Black Rock with their world class asset in resource-rich Tanzania, is perfectly placed to capitalise on the electronic vehicle revolution.
The stock is in a strong uptrend and technically looks good, but we’d be inclined to wait a day or two to see how the overall market plays out before taking a position. Medium- to long-term we like the stock, but we’re happy to wait for a better entry signal.
1. Top end channel resistance
2. Short term target of $1
Brainchip has been one of the most highly traded stocks across Opentrader users for the past two years and for good reason. It typically marches to its own beat and doesn’t really pay much attention to what the overall market is doing, and today is a great example of that.
The stock has been consolidating for the past two months but is today breaking out of its trading range on increased volume, which is a bullish sign. We’re of the view the stock will retest recent highs of $1.27 in the coming days or weeks with the medium-term price target around $1.50.
See how it goes into the close today, but the technically picture is positive and further upside from here looks likely.
1. Support and recent low at $0.80
2. Stock today (6/05/2022) is breaking out of trading range on increased volume
3. First profit target set at $1.27 or approximately 10% higher from here
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