article 3 months old

ASX200: Trumped

Technicals | Mar 05 2018

By Craig Parker, asset manager, Moat Capital

Here we go again, back in no man’s land! Where to from here I hear. Our local market was so close to getting the perfect V recovery, alas it was not to be. I mentioned last week that I expected a little further rise, then some resistance around the 6100 level which we came close too. I didn’t quite expect the level of decline thereafter though and now the Trump trade wars have begun in earnest we could be heading back to a period of higher volatility.

I see Iron Ore has hit its peak with some bearish RSI divergence which could affect our market and economy. A couple of technical areas that I will be watching in the coming days and weeks is the 2-year uptrend line on the weekly chart and a possible inverse head and shoulders pattern forming on the daily chart which could provide some buying opportunity. If you are a longer-term investor, then look at the monthly chart of the ASX 200 and you can see there is no need to panic as we are still in a long-term uptrend. Just watch out for a close below the 5850 level as this could signal a change in trend.

In other sectors, the S&P 500 had an encouraging last day of trading and will be interesting to see where it heads come Monday (Tuesday our time) post the international reaction to the trade tariffs. Our local Financial sector which is essential to help our market head higher has hit a snag and is entrenched in a medium term down trend with resistance along the 60-day moving average whilst in a long term sideways channel. It is currently heading back down towards the support levels which should again provide some buying opportunity. The all-important US 10 Year Treasury Note has come off a little as expected and is now looking like it is biding its time for a push back up towards 3 and above. That will be interesting.

Enjoy your week.

ASX200 daily

ASX200 weekly

ASX200 monthly

ASX200 financials ex-REITs daily

Iron ore weekly

US ten-year 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.

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