Technicals | May 08 2017
By Craig Parker, asset manager, Moat Capital
The sell in May and go away adage is playing out at the moment. As mentioned last week our market is due for a dismal May as we haven’t had one for a few years now. Unfortunately, we are off to a good start with the 6000 barrier truly testing the market out. We commenced the week well with Monday teasing the 6000 level and then Tuesday finished well late in the day but alas as has happened in mid-April we fell away failing to hit the 6000 mark. There are two trains of thought around a resistance level and that is the more often the attempts the more likely to break through however, in the initial phase I tend to go with the second train of thought that the more failed attempts the weaker it becomes, sort of like someone trying to push out more and more reps on the bench press eventually having to take a rest. It seems that we are in that phase now, taking a rest. A time out if you like to reset and make another attempt. All eyes should be on the 60-day moving average for support as well as support around the 5800 mark where there was once some resistance. A break in either of these levels could see us move back towards the 200-day moving average.
From a geopolitical perspective, we have the French second round elections over the weekend and with polling showing a clear lead to Macron we might see some fresh optimism in the market come next week. With the big bad bear of North Korea still hanging around the medium-term future remains a little shaky and as you can see the S&P 500 has hit a resistance level at the 2400 mark which needs to be broken for further upside momentum to take hold. Perhaps Donald can talk tax cuts again overnight and get the markets excited.
ASX200 daily
S&P500 daily
Authorised Representative Sentinel Private Wealth AFSL 344762
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