Technicals | Jul 09 2018
By Craig Parker, asset manager, Moat Capital
Now that the EOFY selling is out of the way it seems the buyers have come out in full swing and driven the market higher last week. So much for getting back towards the 6150 level that I was looking for before the next move higher. Seems I will have to wait. Our market seems to be at odds with other global markets especially when compared to one of our largest neighbor markets Hong Kong. The Hang Seng chart has crossed down through a 3-year uptrend line indicating a possible shift in momentum. Some say the Hong Kong stock market is the canary in the gold mine for our market. I am not sure about that, but I would be paying attention to our largest trading partner.
Apparently, investors are thinking that the US has the upper hand in the trade wars and China has the most to lose. Personally, I am not sure this is the case considering spending patterns in the US compared to their Chinese counterparts. Markets are driven at times solely by investor sentiment and this can go on for lengthy periods of time before reality sets in. I am beginning to think this is the case for our local market, especially considering our future of higher rates for overly indebted borrowers even if the cash rate doesn’t go higher, reducing asset prices, low inflation with negative real wages growth, higher oil prices all resulting in anemic consumer spending.
It is only a matter of time before our market gets a hit of reality. For now, let’s enjoy the positive investor sentiment as can be seen in the ASX 200 Monthly chart below which is firmly in the monthly up trending channel and heading into the overbought half. Enjoy your week!
ASX200 monthly
Hang Seng weekly
Authorised Representative Life Plan FP AFSL 449658
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