Technicals | Jul 16 2018
By Craig Parker, asset manager, Moat Capital
Nothing to see this past week but the similarity of the ASX 200 price action to the Financial ex REIT sector. The trading ranges are almost identical indicating that our market is currently beholden to the Banks. The Financial sector is hitting up against the 200-day moving average, so it will be interesting to see whether this holds as it has done in the past 6 months since December 2017. A break up through will signal the recent recovery is more than just a counter trend in the secondary down trend.
If you look at the weekly chart it is also up against the down trend line which is another barrier to overcome. Personally, I don’t see a significant break, through these barriers and look more towards some choppy sideways action in the coming weeks. This view is reinforced by Iron Ore not doing much and our dollar looking to recover somewhat in the short term (towards the 75 mark) and Oil also unsure where to go from here.
One shining light for us is it looks like China represented by the Shanghai composite may have bottomed for now with a strong week just gone after bullish RSI divergence and nearing its low back in January 2016 where you would expect some support. Another chart to watch is again the US 10 Year Treasury Note which from a technical point of view is still in an uptrend. It has been in a counter trend down over the past few weeks and assuming the secondary uptrend is too hold up, I would expect it to resume its uptrend. It could wander down towards the 2.75 mark where it nears its secondary uptrend line. A jump from there could signal some uncertainty in equities. Enjoy your week!
ASX200 daily
ASX200 financials ex-REITs
Shanghai Composite daily
US ten-year yield weekly
Authorised Representative Life Plan FP AFSL 449658
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