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ASX200: 5900 Is The New 6000

Technicals | Oct 30 2017

By Craig Parker, asset manager, Moat Capital

5900 is the new 6000 as the ASX 200 does it’s best to get back to 6000.  Alas we have Monday and with the US markets rallying overnight it looks like it will be onwards and upwards. Even with our political turmoil we have seen it all before and no doubt we will recover. As mentioned in my previous report I still believe the 6000 level will see some resistance as we witnessed the week just gone. It seems Fridays have gone from buy day to volatile day with the last two Fridays being large outside ranges and last Friday being much larger than the previous Friday. This suggests some jitters and perhaps a counter trend in the medium term.

In the short term we are likely to follow the US lead with large moves overnight on the NASDAQ and S&P 500. The NASDAQ was over 2% and a clear breakout in a strong uptrend. How long this can last is anyone’s guess however, it is now a considerable distance from the 60-day moving average and history suggests it must come back to the 60-day moving average. The time frame is generally within weeks. The same can be said for the S&P 500 and it also has some serious RSI bearish divergence on the daily chart as highlighted.

Oil is nearing some resistance so look out for some wavering around 54 next week. On the domestic front I will be watching the daily financials chart as it seems to be having trouble making a clear new high higher than the previous one. Hopefully next week it can break to new highs otherwise, it could slide back into the medium term down trend and at best a sideways channel. Considering this sector is a fair chunk of our market it is one to watch closely.

ASX200 daily

ASX200 financials ex-REITs daily

S&P500 daily

Nasdaq daily

WTI oil 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.

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