ChartWatch: Your Top 10 ASX stocks: CSL, BHP, FMG, PLS, WDS, RMD, CBA, RIO, MIN & MQG

Drum roll please (opens envelope)…The 10 ASX stocks most added to Market Index users’ watch lists in 2023 were: 

The list is, perhaps, not too surprising considering six of the stocks in the list are in the top ten ASX companies by market capitalisation. Of the other four, Woodside Energy and Resmed are in the top twenty, and Pilbara Minerals and Mineral Resources are in the top fifty. Perhaps the last two are punching a little above their weight, but again, no major surprise considering they’re the two preeminent lithium plays on the ASX. I know how much you all love lithium!

In today’s ChartWatch, I intend to provide you with technical analysis on each of these companies – that is, the trends, price action, candles, and key levels to watch. As we look through the charts of each stock, we’ll see they’ve experienced vastly different fortunes in 2023. The analysis should serve as a timely reminder for investors that they shouldn’t simply play their favourites! Let’s get stuck in!

1. CSL

ST/LT Trends: ⬆️/➡️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side (i.e., white bodies and or downward-pointing shadows)

Key levels: Supply @ $288.67, $297.90 vs Demand @ $279.67

View: It looks like the shorts were caught out in November, and the rally has gone from strength to strength since. There are plenty of indicators of excess demand here. Put simply: The more indicators of excess demand – the greater the probability of continued price appreciation.

I can’t see anything major in the trends, price action, or candles to suggest the prevailing short-term uptrend can’t continue. The last push to $288.67 could have been better though – perhaps showing a modest loss of upward momentum (i.e. compared to the prior upswing from 8-21 December).

This is possibly due to the proximity of $297.90, which I see as the key overhead resistance level. I suggest caution beneath there, i.e., watch for the occurrence of supply-side candles (black bodies and or upward-pointing shadows), which could signal excess supply is working into the market.

$279.67 is a key demand point – a close below here would be unwelcome for CSL bulls, but more broadly speaking, the short-term uptrend remains intact until a close below the ST trend ribbon (currently $272-$278).

2. BHP Group (BHP)

ST/LT Trends: ⬆️/⬆️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $50.84 vs Demand @ $48.74, $49.07

View: I’m a big fan of the BHP chart. There are plenty of indicators of excess demand here: Great trends, great price action, and great candles – check, check, check.

But BHP lacks something super important for technical analysts, which CSL has – and it’s not a bad thing! BHP is probing new all-time highs and lacks any major overhead resistance levels. As a trend follower, I love bottom-left-top-right charts, but I love blue sky even more.

The pullback from the recent record at $50.84 does have a couple of black candles of note, so I’d prefer to see a couple of white ones to balance these out and signal the pullback has run its course. I’m happy upside momentum is intact until a close below $49.07, and the short-term uptrend is intact until a close below the ST trend ribbon (currently $48.30-$49.05).

3. Fortescue (FMG)

ST/LT Trends: ⬆️/⬆️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $29.48 vs Demand @ $27.51

View: This is probably the company with the most detractors in the list…yet it has perhaps the best chart! A picture of excess demand, and it has been for many months now.

I have zero concerns about this chart, but if, like many non-trend followers, the steepness of the FMG ascent makes you nervous, watch out for the key signals excess supply has arrived: Supply side candles, lower peaks, and eventually, lower troughs.

4. Pilbara Minerals (PLS)

ST/LT Trends: ⬆️/⬆️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $50.84 vs Demand @ $48.74, $49.07

View: I tweeted the odd Pilbara Minerals chart over the course of 2023. I turned bearish after the two big black candles on 14-15 August. Judging by the replies to my tweets since that time, I propose Pilbara Minerals has possibly the most loyal shareholders of any ASX company! They certainly didn’t like my views on their darling!

Well, I have some good news and some bad news PLS loyalists. The good news is the chart shows some very solid signs of a major low being bashed out. I’d say there’s better than a 50-50 chance $3.10 will stand as a major turning point.

The massive white candle on that day is typical of short covering – and we all know how important this will be for PLS. Higher peaks and higher troughs since, along with a spattering of demand side candles demonstrates some speculative and positional buying since then.

The bad news is the $4 level appears to hold with it some motivated supply. The recent peaks at $4.01 and $4 on 15 December and 2 January respectively demonstrate this. Troughs continue to print higher – that’s encouraging because it speaks of continued building demand.

Ideally, we don’t see a close below $3.71, but before that, preferably not below the ST trend ribbon (currently $3.77-$3.81). Basically, if PLS can clear that pesky supply zone, it could continue its climb back towards the major August peak. Black candles / upward pointing shadows will kill this rally, while a big black candle closing above $4.01 and preferably the LT trend ribbon (currently $4.07-$4.11) will redeem it.

5. Woodside Energy (WDS)

ST/LT Trends: ➡️/⬇️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Mixed

Key levels: Supply @ $32.22, $39.92, $33.62 vs Demand @ $28.76, $30.84

View: It was a tale of two halves for Woodside in 2023 – largely following the crude oil price up in the first half and then down in the second. Crude oil prices are holding near recent lows, but the updraft of the broader ASX rally has dragged the WDS chart to a recent recovery from its December low of $28.76.

This is the least bullish chart of the five we’ve seen so far. The short-term trend is neutral and the long-term trend is down. While price action and candles since the $28.76 low signal excess demand has returned, I feel there’s just too much potential overhead supply to place this chart setup ahead of the previous four. A close below $30.84 would snuff the fledgling Woodside rally.

6. Resmed (RMD)

ST/LT Trends: ⬆️/⬇️

Price Action: ⬇️Peaks & ⬇️Troughs

Candles: Predominantly supply side since 14 December

Key levels: Supply @ $26.35 vs Demand @ $24.15

View: Annus horribilis. Pretty much the only way to describe Resmed’s 2023! I suspect a few bought the dip too early on this one as it just kept dipping. Unfortunately for Resmed shareholders, there are more than a few signals the recent rally is losing steam.

In each of the charts I show you today, keep an eye out for how well my LT trend ribbons tend to signal where short-term rallies or pullbacks reverse course to realign with the prevailing long-term trend. Supply-side candles in the LT downtrend ribbon are usually a very bad sign, and the candles from $26.35 have been terrible. Worse still, consider how good the rest of the market has been over this time.

I do hope $24.15 can hold, after all, previous zones of supply tend to act as potential future zones of demand. If it can’t, there’s a good chance Resmed could plumb the 2023 lows.

7. Commonwealth Bank (CBA)

ST/LT Trends: ⬆️/⬆️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $113.61 vs Demand @ $111.43

View: Another chart with a solid finish to 2023. Nice trends, price action, and candles. No major complaints here, although I don’t want to see too many more black candles developing below $113.61.

$111.43 should support, if it doesn’t, there’s a good chance CBA could retrace to the ST trend ribbon (currently $107.75-$109.50). As long as it closes above this ribbon, the short-term uptrend remains intact.

It’s worth checking out CBA on the weekly chart to get a bigger picture view of where it currently sits. It’s all blue sky above $113.61, which makes this chart even more attractive to me. Plenty of excess demand is currently evident so CBA shareholders should feel pretty chuffed with themselves!

8. Rio Tinto (RIO)

ST/LT Trends: ⬆️/⬆️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $136.73 vs Demand @ $129.89

View: Going to go ditto for Rio Tinto versus Fortescue. I really can’t find anything I don’t like about this chart. Oh…it’s gone up too much, right? This is faulty thinking. The only way a chart can look this good is if cash looking for the best return wants in, and shareholders looking for the best return believe they’ve already found it. Translation: Plenty of demand. Little supply. That’s exactly when I want to be in a stock!

9. Mineral Resources (MIN)

ST/LT Trends: ⬆️/➡️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $70.97, $74.77, $77.44 vs Demand @ $66.95

View: Spot the iron ore company with the massive lithium exposure! If you chose MinRes as your iron ore stock over BHP, RIO, and FMG in 2023, you'd probably be cursing your luck. Well, it’s either luck or the fact that lithium prices plunged over 70% from their highs. Still, MinRes has held up much better than its lithium counterparts, so that’s something.

As far as the chart goes, it’s not a trainwreck, but it’s not shooting the lights out in terms of clear signals of excess demand, either. The short-term trend, price action and candles are solid enough to likely mark the 23 October low at $56.20 as a major one.

10. Macquarie Group (MQG)

ST/LT Trends: ⬆️/➡️

Price Action: ⬆️Peaks & ⬆️Troughs

Candles: Predominantly demand-side

Key levels: Supply @ $70.97, $74.77, $77.44 vs Demand @ $66.95

View: Last, not quite least, but definitely not the most either. Another chart that staged a dramatic (miraculous?) turnaround in November, and perhaps therefore was only saved by the broader market rally.

Either way, there’s quite a bit to like about the chart in terms of its short-term trend, price action, and candles (up until 2 January). The last couple of candles are disturbing. However, I am surprised how easily the price has retraced back to the trough at $179.75. That level will need to hold, or Macquarie’s pullback could push further towards the ST trend ribbon (currently $175-$177.80).

My biggest issue with the Macquarie chart is the same issue I had with the Woodside chart, there’s probably going to be too much pesky supply overhead to place this chart setup above many of the others in this list. $184.98-$186.29 is the key zone to watch in this regard. A close above there could facilitate a tickle of the 2023 high of $195.75.