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ASX200: Cautious Week

Technicals | Mar 13 2017

By Craig Parker, asset manager, Moat Capital

All eyes on the 5800 level! Can we break the 5800-level next week which would send us towards the 6000 mark? Naturally a lot will depend on Janet Yellen and Fed policy. It remains to be seen whether the S&P 500 will take the news well or embrace the opportunity to have a break from the upward momentum since November last year. If so then our market could again see resistance at the 5800 level and possibly move back towards the 5600 level. Currently we are treading water with a sideways week albeit with a positive finish to the week today. The S&P 500 is currently sitting on a medium-term uptrend line and a break down through this line would mean an approximate 5% move down before any further support levels are reached. An index to watch if you are a Dow Theorist is the Dow Jones Transportation Index which you can see below has turned down with very clear bearish divergence. It will be interesting to see if the Dow Jones does the same and then the flow on effect to our market.

Closer to home I am watching the Shanghai Composite which is approaching some medium-term uptrend lines and as mentioned a couple of weeks ago, Iron Ore (which was illustrating bearish divergence on the RSI) could come back to around the 80 mark where this level could possibly provide some support for the materials sector and possibly the S&P/ASX 200. The 80 mark is a critical technical level as any break would see Iron Ore support levels around the 60 to 65 mark. Our financial sector which has been driving most of the upward momentum is nearing some resistance and has bearish divergence on the RSI. Something to keep an eye on. Looks like we are setting up for a possibly cautious week ahead.

ASX200 daily

S&P500 daily


Dow Jones Transportation Index weekly

Shanghai Composite weekly

Iron Ore weekly

ASX200 Financials ex-REITs weekly

Authorised Representative Sentinel Private Wealth AFSL 344762

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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