Technicals | Sep 10 2018
By Craig Parker, asset manager, Moat Capital
Finally, we are having the counter trend we needed to have. I mentioned some weeks ago that a counter trend back towards the 6150 level was required before a resumption of the overall uptrend towards the 6500 and higher level. We are now at this level which was an old resistance level as can be seen in the daily chart below. Hopefully this can provide some support especially considering the counter trend has been more abrupt than preferred which could signal something a little more sinister brewing than merely a counter trend. Time will tell. I’ll be more concerned if we go below the 200-day moving average which we are a little way off. This could also provide another opportunity for support.
On the weekly chart the ascending channel could possibly be flattening however, if you look at the monthly chart things are still looking ok for the longer-term uptrend. Technically the monthly chart could get back down around the 6000 level and still be ok from a longer-term perspective and possibly a good buying opportunity. The issue going forward is the S&P 500 which is getting some wobbles and combine this with the US 10 Year Treasury Note which has come to life the last week as well. There is obviously some negative sentiment in our market considering our dollar has fallen off a cliff into the low 70’s and the biggest issue is our Financial sector which has consolidated below the 60 and 200 day moving averages. Combine this with a confirmed short term down trend with a lower high and lower low.
Perhaps the reality of higher interest rates, tighter lending criteria and falling house prices is setting in. This isn’t great news for the short term. If it turns out that this is a change in momentum and with the S&P 500 turning with the possibility of serious correction in the next 2 years, then it could turn out to be one of the longest time periods of recovering to previous highs (from pre GFC levels) in our history (ASX 200). 15 to 20 years won’t be out of the question. Let’s hope the low dollar will help sustain our market. Enjoy your week!
ASX200 daily
ASX200 weekly
ASX200 monthly
ASX200 financials ex-REITs daily
US ten-year yield daily
AUDUSD weekly
Authorised Representative Life Plan FP AFSL 449658
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