Technicals | Aug 20 2018
By Craig Parker, asset manager, Moat Capital
Onwards and upwards we go. The positive momentum continues to push the market higher. The Royal Commission didn’t expose anything new and the Financial sector is recovering with further consolidation above the 60 day and 200 day moving averages which is very positive for this sector and is helping move our overall market higher. In the short term our market looks like it is heading for the 6400 level and perhaps beyond. This will largely depend on the impetus behind the Financial sector.
For now, investors are still thinking the Banks are good value. This could last a little longer with a further 2% to 5% upside likely. The daily chart on the ASX 200 is seeing some decent separation from the 60 day and 200 day moving averages which historically suggests a correction sometime soon. The daily chart is also hugging the secondary uptrend line and for the uptrend to remain intact for any length of time we would need to see some acceleration in the upward movement. The weekly RSI is still bearish however, this indicator can be wrong, and a time lag is often a common occurrence which means the recent run up on the ASX 200 could have some life left in it yet.
An interesting chart to look at is the ASX 200 Volatility index which at the end of the previous week was at the historical lows around 10 with last week taking off from the support level. These low levels cannot be maintained for prolonged periods and higher volatility is likely in the medium term. I’d be looking out around the 6400 level for some heightened volatility. Enjoy your week.
ASX200 daily
ASX200 weekly
ASX200 monthly
ASX200 financials ex-REITs daily
ASX200 VIX weekly
Authorised Representative Life Plan FP AFSL 449658
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