ASX 200 stocks with fresh 52-week highs and lows – Week 2

Welcome back to the 52-week Series – A recap of ASX 200 stocks marking yearly highs and lows in the past week.

52-Week Highs and Lows by Sector

• Materials: 9 Highs, 2 Lows

• Discretionary: 4 Highs, 0 Lows

• Communication Services: 4 Highs, 0 Lows

• Industrials: 3 Highs, 1 Low

• Energy: 2 Highs, 0 Lows

• Healthcare: 2 Highs, 0 Lows

• Financials: 2 Highs, 0 Lows

• Technology: 1 High, 0 Lows

• Staples and Utilities: 0 Highs, 0 Lows

Why does this matter: A research thesis by Thomas J. George and Chuan-Yang Hwang titled The 52-Week High and Momentum Investing found that a) the closer a stock's current price is to its 52-week high, the stronger the stock performs in the subsequent period and b) nearness to the 52-week high is a better predictor of future returns than past returns. US trader Mark Minervini also notes that “when you see a growing number of names in a particular industry making new 52-week highs (especially coming off a market low), this could be an indication that a group advance is underway.” In 2023, this proved useful for identifying moves made by construction and building materials, iron ore and insurance stocks.

What does the data tell us:

• Iron ore majors BHP, Rio Tinto and Fortescue are rallying to 52-week (if not all-time highs) after iron ore prices briefly crossed US$140 a tonne earlier this year

• Construction and building materials stocks experienced a broad-based rally between June and September. The stocks are kicking on after a four month breather (September to late December)

• Discretionary stocks continue to defy expectations, especially those with sound earnings

  • For example – Super Retail Group reported 4% year-on-year sales growth for the first 16 weeks of FY24 vs. Macquarie expectations of Group revenue to fall 0.6% for FY24

• A majority of the stocks hitting 52-week highs in the past week have pulled back sharply – Just look at the '1 Week' column – Most stocks are down 3-10%

• The pullback reflects a weak start to 2024. The blame is largely chalked up more to technical factors such as overbought conditions and stretched positioning

• The good news is that the sheer number of stocks hitting 52-week highs is a sign of longer term strength for markets

Materials Stocks Are Making a Push

Discretionary Stocks Are Defying Expectations

... And Everything Else

Stocks at 52-Week Lows