ASX200 market update: Top 3 stocks to watch this week

We analyse some of the most important things traders and investors should watch out for in the week ahead.

Market wrap: volatility persists as ASX200 hits global wall of worry

The Australia 200 remains swept up in the anxiety plaguing global markets, as fears about weakening growth, persistent inflation and monetary policy tightening weighed on risk sentiment. The index is clung onto technical support around 7180 last week, but short-term momentum and risk overall appears skewed to the downside. Higher global bond yields have weighed on growth stocks especially, while one of the few positives for the market has been the energy sector, as oil prices surge on the unfolding global energy crunch. Also bucking the trend have been travel stocks, which we’ve decided to focus on here, which have spiked as investors grow more confident in the so-called ‘re-opening’ trade.

Top 3 ASX stocks to watch

Here are 3 stocks that have caught our eye and may be worth watching in the week ahead.

Flight Centre Travel Group (FLT)

As we discussed here before, the technicals for fliFlight Centre Travel Group Ltd shares have been highly constructive. After announcements from Federal and State Governments of easing of domestic and international restrictions in the near future, along with last week’s breakthrough announcement from US pharma-giant Merck & Co Inc (All Sessions) regarding its successful antiviral Covid-19 pill, FLT shares have surged as hopes of freer travel have grown.

Price has broken above trend channel resistance now, with momentum accelerating to the upside. A very overbought reading on the weekly RSI suggests risk-reward is less attractive right now, however signs of a pullback are not yet evident. The next key level to watch on the upside looks to be around $28.20 per share.

Webjet (WEB)

As one might expect, the technicals for online travel agency Webjet Ltd are similar to that of Flight Centre, as investors jump back into travel retailers. Risk and reward based on the charts looks more attractive for WEB however, with the weekly RSI not yet into technically overbought territory, and price still trading within the stock’s post-pandemic trend channel. Traders might be watching for a similar break-out for WEB shares, which, if it materializes, opens up a rally to around $9.30 per share, where key resistance the 200-week moving average presently sit.

QANTAS Airways (QAN)

Qantas Airways Ltd shares have arguably been speculators’ favoured play on Australia’s reopening trade through the pandemic, and it’s perhaps for this reason that the charts suggest there might be less upside risk for the stock from here. The share price is roughly back to its pre-pandemic range, and is currently trading above the 20, 50, 100 and 200 weekly MAs. Although risk still appears skewed to the upside for the stock, especially as investors anticipate a post-pandemic travel boom. Key resistance currently sits around $6.10 per share, while support is at roughly $5.30, which may present the ideal opportunity to buy any dip in the stock.

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