ASX200 outlook: 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.

ASX 200 outlook: global growth fears hinders local market

It was a tough week for Australian equities last week, with Australia 200 recording a drop of 1.4%. The benchmark opened slightly higher on Monday, 13 September, hitting 7,428.10 points by 12:37 PM. The weakness in the index has come amidst broader fears of weaker global economic growth, as the Delta variant of the Covid-19 virus delays the complete reopening of developed economies and continues to disrupt economic activity. Naturally, the growth sensitive materials and energy sectors were the ASX’s biggest laggards for the week, falling in sympathy with broad commodity prices, with iron ore extending during the trading week its recent downtrend.

Top 3 ASX stocks to watch

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

Fortescue Metal Group (FMG)

Fortescue Metals Group Ltd shares came under significant pressure during the week, after the stock went ex-dividend last Monday and iron ore prices continued to weigh on the materials sector. The charts for FMG shares are looking increasingly bearish now. A double top can be observed for the stock at around $26.60 per share, while price momentum is turning to the downside and the post-pandemic trendline has clearly broken down. The risk appears potentially skewed to the downside for the shares now, with support at $15.20 a key level to watch. Previous support now resistance at around $19.50 may also prove an important level.

Bluescope Steel (BSL)

BlueScope Steel Ltd shares declined for a second successive week last week, with price weighed down by the stock going ex-dividend, after having posted a fortnight earlier a solid set of annual results, which saw the company triple its dividend and announce a major stock buyback program. After having reached an all-time high price following those results, BSL shares have clearly lost upside momentum since, with concerns about peaking steal price and uncertain economic conditions softening sentiment towards them. The technicals remain constructive for BSL shares with the stock still in an uptrend. However, divergence in price and the weekly RSI suggest upside momentum could be waning and risk-reward could be skewed to the downside.

AMP (AMP)

Embattled investment manager AMP Ltd shares remain heavily out of favour with the market, as the company continues to struggle to extricate itself out of the mess revealed by the Financial Services Royal Commission. Overall, analysts and investors remain very bearish on the stock, with the company failing to convince the market it has a winning strategy for the future. Despite, there a signals gleaned from the technicals that perhaps AMP shares are bottoming out, or at least off an attractive risk-reward on a long trade right now. Downside momentum has slowed for the stock, there’s a positive divergence emerging on the RSI, and technical support at 1.05 is proving well respected.

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