Technicals | Feb 26 2018
By Craig Parker, asset manager, Moat Capital
This week I thought I would begin with the chart that started it all, the US 10 Year Treasury Note. A couple of weeks ago I mentioned that it looks like it might be taking a little breather as it approached resistance around the 3 level with some bearish divergence and that this would be good for equities. Even though the pullback is only small at this stage it has been good for equities as the bulls have seen the recent pullback as a buying opportunity. I’ll be watching this chart closely to help provide an indication of the next high in the equities markets.
From a technical point of view our market hit the 2-year uptrend line and behaved accordingly. Now all eyes are on the 60-day moving average for any resistance. It would be hard to go against the longer-term trend at this stage although we might see some wavering around the 60-day moving average. On another positive note our Financial sector hit a support level and took off once more. All in all, happy days for our market. The only thing to watch out for is a spike in the 10 Year Treasury Note which will send us into a sideways channel.
If I had to suggest what the medium-term future holds I think equities will go slightly higher and our market back up towards the 6140 level whilst the 10 Year Treasury Note has a small pullback. The 10 Year Treasury Note will then again turn up causing equities to decline once again and sending our market into a medium term sideways channel.
US ten-year yield daily
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ASX200 daily
ASX200 financials ex-REITs daily
Authorised Representative Sentinel Private Wealth AFSL 344762
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