Technicals | Nov 27 2017
By Craig Parker, asset manager, Moat Capital
Further consolidation required. Late Friday the market made a last hour comeback and ended the week slightly above last week. It looks like more consolidation is on the horizon. Ideally, from a technical perspective I would like to see the ASX200 get back up around the 6000 mark, or just above and then with clear bearish divergence on the daily RSI look at correcting back around the 5900 level in preparation for a move higher into the low 6000’s.
On the negative side the Financial sector has settled into a medium-term downtrend with the move down on Friday and is now below the 200-day moving average and nearing the 60-day moving average. It will need to be monitored around these averages for the coming weeks and might put a strain on any advance in the market overall. Materials and Energy continue to push the upward momentum although Light Crude is nearing the high end of the 40 to 60 channel that could prove difficult to break, unless of course Iran and Saudi Arabia take the gloves off. Not sure the Saudi’s have what it takes to sort out a hardened Iranian army. That would send Oil prices soaring and pump prices high here putting further pressure on the household budgets and consumer spending habits.
One chart (daily) to keep an eye on is the US 10 Year Bond Rate which is squeezing into a pennant pattern and a head and shoulders pattern simultaneously. A jump out to the upside could mean a December correction and negative for the Property trust sector. A move to the downside and this could be good for further equity market upside.
ASX200 daily
ASX200 financials ex-REITs daily
US ten-year bond yield daily
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.
Reprinted with permission of the publisher. Content included in this article is not by association the view of FNArena (see our disclaimer).
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
