At the time of writing, the sting of inflation has hit the US markets as the hope that the numbers were turning in the right direction was dashed and the “doves” of more interest rate rises are set to be released next week when the US Federal Reserve meets again. In turn stock markets reacted south as they attempt to process the news.

In short, rising interest rates are bad for stock markets generally and this will flow through to our own inflation numbers no doubt, so we need to brace for higher rates. That is not all bad if you are a cash investor, it means better returns after what has been a pitiful time for that asset over the last 10 years. For those with a mortgage more increases are on their way. If we frame asset classes as being a situation of money flow, moving from weak to strong or high risk to safety there is likely to be opportunity for the trader who is only interested in movement and direction as opposed to long term appreciation.

As primarily a commodities trader, my focus draws me back to stocks that link to hard assets so it’s not surprising that I am drawn to BHP. As Australia’s largest stock by market capitalisation it’s fair to say it’s well known and of course it has global reach as it’s projects are not just within our borders. This market is a great one to research and study, and as we all know one of the exercises from the Smarter Starter Pack is all about BHP. I wonder if that is still on your to do list?

Since 2016 where the market formed its $12 lows, we have seen significant price increases to highs this year at approximately $48. Chart 1 below displays the considerable rise and when you consider they have paid out around $13 a share in dividends, it’s been a good news story. You will also note a line at $31, this will become useful going forward but just note the support and resistance at that level and the 150% level of the double bottoms.