Fortescue Shares Oversold

This story features FORTESCUE LIMITED. For more info SHARE ANALYSIS: FMG

Michael Gable of Fairmont Equities sees Fortescue shares recovering from current oversold conditions.

By Michael Gable 

US markets continue to climb the wall of worry and the S&P/ASX200 Index continues to see the trading range tighten up.

Locally, we have seen weak household spending numbers, as well as real retail sales growth. The US has also seen some soft economic numbers which demonstrate an economy that is expanding, but not running too hot.

Because we have had some short-term uncertainty around interest rates, markets will appreciate seeing these softer numbers.

The first couple of quarters of 2024 have, of course, seen some softness in commodity stocks. This is why the Australian market hasn’t progressed compared to the US.

But this short-term weakness looks set to end as commodity stocks naturally see a rotation of funds back into the sector. One cause for this short-term weakness has been the strengthening US Dollar Index.

Today’s technical view is on Fortescue ((FMG)).

The decline during May and June has seen FMG shares become oversold before bouncing again and forming a buy signal on the daily RSI (circled).

Price action at the recent low looks very encouraging and the rounding out of the bottom is a good sign that a new low is in place.

This also appears to be a low from an Elliott Wave perspective, where the February-March decline is about equal in length to the May-June decline.

FMG is a buy at these levels as there is a high chance that it recovers from here. Nearest resistance levels are near $24.50 and then $26.50.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

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

Disclaimer

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.
 

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms