Technicals | May 29 2017
By Craig Parker, asset manager, Moat Capital
As the US market headed up for the week we went sideways to slightly down. This doesn’t bode well for when US markets finally have a meaningful correction which would exacerbate our otherwise anemic market. Technically we are still looking weak with the move down Friday along a short-term downtrend line on the daily chart. We now could be looking to the 200-day moving average for support. On the slightly positive side the weekly chart could possibly be forming a support level at the 5730 mark although it doesn’t look solid. Currently our market is in a short-term downtrend however it would need to drop below the 5620 level on the weekly chart for it to be considered a medium-term downtrend which, could spell a change in momentum.
We seem to be more correlated to China recently with the Shanghai Composite chart below illustrating similar patterns. A bit of a concern considering they have breached the 200-day moving average but on the plus side China seems to be finding some temporary support with strong bullish RSI divergence. Worryingly our financial sector has just broken below a recent medium term low indicating a possible shift in momentum to down. The financial sector is on the 200-day moving average so there may be some support around this level in the short term however, it doesn’t look good from a medium to long term perspective. Iron Ore prices also look technically weak which isn’t great for our materials sector. All in all, not a lot of sunshine.
ASX200 daily
ASX200 weekly
ASX Financials sector ex-REITs weekly
Shanghai Composite daily
Shanghai Composite weekly
Authorised Representative Sentinel Private Wealth AFSL 344762
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