ASX200: 6000 Still The Target

Technicals | Mar 20 2017

By Craig Parker, asset manager, Moat Capital

Our market is currently dancing around the 5800 ceiling and from a technical standpoint is set up very well to make a break through 5800 and head for the 6000 level. We have recent higher lows on the daily and the weekly and monthly charts are in uptrends. The monthly chart looks particularly good however the weekly chart has some bearish RSI divergence.  Our market is squeezing into a corner ready for a breakout in either direction. The technical signals would suggest the upside is favoured in the short term. If this is the case, then I would be getting very wary at the 6000 mark.

The big elephant in the room is the S&P500 and the fact that it is still technically very overbought with clear bearish divergence on the RSI. This combined with the daily price action being a considerable distance from the 60-day moving average and daylight to the 200-day moving average should spell some need for caution.  This cannot last and when it corrects our market is likely to follow.  Technically the market can hover along the 60-day moving average for a long period when a strong trend is in place so you can ignore the 200-day moving average in this instance. It will be interesting to see how the market digests Trumps budget. The democrats suggest it is good for big business and not so great for the Trump supporters. Poor and middle class copping the brunt. Sounds good for the share market and not so good for every day Americans. They seem to embrace doing it tough. Time will tell. Gold has also had a little jump of late which can suggest some caution is creeping into the market. Investors will need to be close to the exit if they wish to avoid the worst of a correction.

ASX200 daily

ASX200 weekly

S&P500 daily

 

Authorised Representative Sentinel Private Wealth AFSL 344762

www.moatcapital.com.au

Important Information

This document and its contents are general in nature and do not constitute or convey personal advice.  It has been prepared without consideration of anyone's particular financial situation, needs or financial objectives.  Personal advice should be sought before acting on any of the areas discussed.  The authors and distributors of this document accept no liability for any loss or damage suffered by any person as a result of that person, or any other person, placing any reliance on the contents of this document.

Moat Capital has made every reasonable effort to ensure the information provided is correct, but Moat Capital makes no representation or any warranty as to whether the information is accurate, complete or up to date.  To the extent permitted by law, Moat Capital accepts no responsibility for any errors or misstatements, negligent or otherwise.  The information provided may be based on assumptions or market conditions and may change without notice.

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