Why May Is the Best Month to Buy These ASX Stocks
By Fil Tortevski and Pedro Banales
May and June are historically two of the more bearish months on the Australian share market, which means broad rallies are rare and individual stock selection becomes the difference between a flat portfolio and a profitable one. In other words, May is a stock pickers' market, and right now, several ASX names are setting up for what could be standout moves while the broader index struggles for direction.
In the latest episode of the Australian Stock Market Show, Wealth Within's Filip Tortevski and senior analyst Pedro Banales broke down three ASX stocks that are showing technical and fundamental signs of major upside in the coming weeks. Here's a closer look at each one, plus the critical price levels every investor should be watching.
Why Stock Selection Matters More in May
When the index is range-bound or under pressure, the temptation is to wait it out. But that's exactly when the best risk-to-reward setups appear, because strong stocks separate themselves from weak ones in a way that's almost invisible during raging bull markets. Reading those setups requires solid technical analysis skills, the kind that turn ambiguous price action into clear, repeatable trade decisions.
If you want to develop that skill set properly, Wealth Within's share trading education is built specifically to teach the structured framework that professional traders use to identify breakouts, time entries, and manage risk across all market conditions.
Stock 1: Develop Global Limited (ASX: DVP)
Develop Global is a different kind of miner. Rather than simply digging up resources and selling them, it builds, runs, and owns its mines, with two advanced zinc and copper projects directly tied to the energy transition story. The company is now transitioning from developer to producer to cash flow machine, and the next phase, production and cash flow acceleration, is exactly the phase institutional investors care about most.
The Volume Story Is Telling
What makes DVP particularly interesting right now is the volume profile. On the weekly chart, this is the first time since January 2025 that volume has consistently held above 8 million shares per week, and zooming out further, it's the first time in the stock's history that we've seen this level of sustained institutional participation. That's not a coincidence; it aligns perfectly with the company's transition into production.
The Critical Levels: $4 to $4.30
The $4 to $4.30 zone has been the ceiling on this stock since 2021. After multiple failed attempts to break through, DVP has now twice rejected moves below $4 (in November 2025 and February 2026), suggesting that this former resistance has become genuine support. Price agreement at this level means buyers and sellers are now treating $4 as the new base.
If the current momentum holds, the next target zone sits between $6 and $7, the prior highs from 2008 to 2011. The stock is currently respecting its long-term momentum line on the weekly chart, with a clean uptrend established since late 2024. As Pedro pointed out, the recent consolidation is unusually orderly compared to previous downturns, which is often the calm before a strong upward move.
Stock 2: Challenger Limited (ASX: CGF)
Challenger sits in the financial sector, but unlike most of its peers, it has been quietly rising while the broader sector falls. The company has reported record annuity sales, with strong inflows driving long-term earnings, plus a $150 million buyback underway and a streamlined balance sheet through capital note redemption. Add the powerful demographic tailwind of an ageing population needing retirement stability, and you have a genuine defensive growth story.
The Critical Level: $7.50
The $7.50 level has been a key historical pivot point on Challenger, dating back to a significant high in 2014. The stock has now bounced off this level and formed a clean consolidation above it, which is a constructive technical pattern. The next levels to watch are a confirmed close above $9 (which would signal a strong continuation), followed by resistance around $9.50, the 2016 high.
The Long-Term Picture
Volume has dropped off slightly during the recent rise, which is worth monitoring, but the longer-term momentum is clearly pointing higher. Pedro highlighted that Challenger has been around since 1997 and has clear cyclical ebbs and flows, making it an excellent trading stock rather than a buy-and-hold.
What's particularly compelling is the comparison between past corrections. The biggest decline in Challenger's history was an 85% correction during the GFC. The stock is now emerging from an 80% correction since COVID, and the way the chart is unfolding (initial run-up, consolidation, then next leg) closely mirrors past expansion phases. We may be at the very start of the next major leg up, with a solid dividend along the way.
For traders who want to learn how to identify these multi-year cyclical setups, the Diploma of Share Trading and Investment provides the proven five step framework used by professional traders to read trends across all timeframes.
Stock 3: A2 Milk Company (ASX: A2M)
A2 Milk made headlines today after it recalled three batches of US infant formula following tests that detected a potential toxin. While no illnesses have been reported and the issue appears isolated to the US-label product, the news triggered a sharp 14% intraday drop. But here's where it gets interesting: the stock closed up 8% from its open, with buyers aggressively stepping in at a critical technical level.
Why the Reversal Matters
The intraday recovery wasn't random. It happened right at the intersection of two major technical levels: a long-term momentum line, and an unfilled gap from February 2025. Markets tend to fill gaps over time, and a2 Milk's history shows it consistently does. The fact that buyers picked up the stock exactly at this confluence suggests today's move could mark the start of a meaningful reversal.
The Critical Levels: $6 and $7
The $6 level has now become the line in the sand. A clean bounce from here followed by a return above $7 would give significant confidence that this was an overreaction to the news, with the stock simply digesting a healthy correction within a longer term uptrend. There's an unfilled gap up to $7.20 that markets typically want to close, and beyond that, $9 becomes the next major target.
A2 Milk has now been in an upward trend since 2023, making this the second-longest sustained uptrend in the stock's history. Until either the November 2024 low or the long-term momentum line is broken, the trend remains intact. Today's price action, with that 11% intraday range and a close on the highs, is exactly the kind of setup professional traders watch for.
A note of caution, though: one day does not make a reversal. Watch how the stock behaves over the coming sessions before committing meaningful capital.
The Common Thread: Timing Beats Stock Picking
All three stocks share something important: they're sitting at clearly defined technical levels where the next few weeks of price action will determine whether they're starting major new legs higher or rolling over into deeper corrections. This is exactly why timing matters more than stock picking in markets like May and June.
DVP needs to hold $4 and break $6. Challenger needs to clear $9 with conviction. A2 Milk needs to defend $6 and reclaim $7. None of these setups can guarantee success, but each one offers a defined risk profile, which is the cornerstone of every consistent trading strategy.
Build the Skills to Trade These Setups Confidently
Trading at these key technical levels requires more than just spotting the level; it requires knowing how to size positions, where to place stop losses, and how to scale into trades as confirmation builds. That's why Wealth Within has spent more than 24 years educating Australian traders to combine technical analysis, fundamental insight, and disciplined money management into a complete trading process.
If you're new to the markets, the Short Course in Share Trading is the perfect starting point, covering the foundational strategies needed to trade safely and profitably in any market condition.
For experienced traders looking to refine their edge with techniques like time analysis, Elliott Wave, and portfolio construction, the Advanced stock trading course builds directly on the Diploma to introduce the sophisticated tools used by professional traders.
You can also explore the latest Hot Stock Tips videos from the Australian Stock Market Show, or learn more about Wealth Within and our 24-plus-year track record in delivering consistent, results-driven trading education.
Final Thoughts
May won't reward investors who simply hold the index and hope for the best. It will reward those who identify specific setups, define their risk, and execute with patience. DVP, Challenger, and a2 Milk are three stocks worth watching closely, not because they're guaranteed winners, but because each one offers a clear, definable trade with the kind of risk-to-reward profile professional traders look for.
Whether or not these setups deliver, the analytical process behind identifying them is the real long term edge. In a stock pickers' market, the traders who do the work today are positioning themselves for outperformance long after May and June are over.
Disclaimer: This article is general in nature and does not constitute personal financial advice. Always conduct your own research or consult a licensed adviser before making investment decisions.
