Technicals | Sep 23 2014
By Michael Gable
The Aussie dollar continues to wreak havoc on the market. All year the pundits have been calling for a lower dollar and that the market was “overdue” for a pullback, so now we have it. The large cap stocks are the most liquid so that is where the selling pressure has been centred. Conversely, when the dollar stabilises and foreign money starts looking for bargains, it will once again be the large cap stocks that lead the market higher. With a year’s worth of gains almost gone, those on the sidelines have their opportunity now to board the train. The market should start to recover from this point but we may see another dip.
ASX200
The S&P/ASX 200 Index has fallen into strong support around 5360. The severity in the fall over the last couple of weeks has seen the market move into oversold in the RSI (circled). Over the last couple of years, this has happened a few times and has led to a low being established in the market. Today may not be the ultimate low however. What we anticipate happening from here is the index staging a short-term rally, probably no higher than about 5550. From there, weakness in the AUD could see selling pressure come back. Our market, at some point in the next few weeks, could come back to these current levels – it may be a higher low, or we may dip down further to about 5300. A worst case scenario in our opinion would be support at 5200. Either way, the likelihood of an imminent bounce provides investors with a “second chance” to exit unfavourable positions and a “retest” of the low in a few weeks time will provide the last buying opportunity for the year.
Content included in this article is not by association the view of FNArena (see our disclaimer).
Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)
Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.
Michael is RG146 Accredited and holds the following formal qualifications:
• Bachelor of Engineering, Hons. (University of Sydney)
• Bachelor of Commerce (University of Sydney)
• Diploma of Mortgage Lending (Finsia)
• Diploma of Financial Services [Financial Planning] (Finsia)
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2
.jpg)
Disclaimer
Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
