article 3 months old

ASX200: Rolling Over

Technicals | May 15 2017

By Craig Parker, asset manager, Moat Capital

Another nothing week where we had a false run to the 6000 on Thursday only to be dealt a serious blow on Friday. As mentioned last week we still seem to be in the rest phase and considering we are close to the 5800-support level and the 60-day moving average I would be beginning to get a little concerned. A drop through either of these levels and there is no support until at least the 5600 level. The negatives from a technical perspective are starting to line up with a recent short term uptrend line broken and then you can look to the S&P 500 daily to see it is really struggling to move past the 2400 resistance level. And with Trumps sacking of the head of the FBI there can only be further uncertainty to come.

Markets can only ignore uncertainty for so long before they capitulate and even more so when markets have been blindly running up based on hype and hope. Unfortunately for our market we are already coming off with the financial sector illustrating some very clear bearish divergence on the RSI weekly chart below. The RSI came through on this occasion with multiple peaks on the RSI lower with corresponding peaks higher on the financials index. Iron ore is also looking very weak and Gold decided to consolidate a little overnight with an up range. If Gold were to progress further this could spell some bad signs for the S&P 500 and a flow on to our market as investors are seeking the safe haven asset. In summary, the short to medium term is starting to look a little negative from a technical perspective with next week possibly breaking some important technical levels. It seems the sell in May and go away mantra is coming to fruition in 2017.

ASX200 daily

S&P500 daily

ASX200 financials ex-REITs weekly

Gold daily

Iron ore 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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