article 3 months old

ASX200: Worse Before Better?

Technicals | Apr 03 2018

By Craig Parker, asset manager, Moat Capital

End of another month and the big question is where will this downtrend end? If we look at the daily chart the low has only edged a little lower than the previous low which suggest our market could have a little further to run. The 3-year downtrend line has a clear break along with the ever important 200 day moving average which could signal a change of momentum. This change has already happened from a short to perhaps medium-term perspective however the question remains if this will turn into a longer-term downtrend. The weekly chart provides an indication of where we could get to in the short term with possible support around the 5650 to 5700 level. It would have to drop below this level to be considered something more serious than a pullback, like the move which occurred in 2015.

From a longer-term perspective, we are still in an uptrend when referring to the monthly chart. For those who are more pessimistic about the recent price action and view it as the beginning of something more then, you might like to keep a keen eye on a break in the monthly uptrend channel which would be below the 5500 level. Hopefully this is not the case and in the next few weeks we consolidate into a position where a continuation of the longer-term uptrend can be begin. The problem with this thinking is that the S&P 500 could get worse before it gets better as can be seen from the monthly chart of the S&P 500 which shows the recent turmoil doesn’t look so bad from a longer-term perspective. Considering the US economy is firing on all cylinders it doesn’t bode well. Perhaps if our dollar and the US 10 Year Treasury Note keep moving lower, this might help cushion the blow to our market. Enjoy your week!

ASX200 daily

ASX200 weekly

ASX200 monthly

S&P500 monthly

US ten-year yield weekly

AUDUSD weekly

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.

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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