Technicals | Sep 17 2018
By Craig Parker, asset manager, Moat Capital
Not much to see from a technical perspective this past week. Hopefully we are seeing signs of the beginning of some consolidation around the 6150 level I mentioned last week. The ASX 200 is still stuck firmly between the 60 day and 200 day moving averages which is neither good nor bad. Our key indicator the Financial sector is still in a downtrend and looking somewhat sick. Our lower dollar doesn’t seem to have helped kick our market on. Hard to see where the positive momentum is going to come from in the short term.
Assuming house prices fall further, credit tightens, and consumers continue to spend more than they earn then the future isn’t looking great. If we look to the US, it is onwards and upwards and more elation for the bulls in the market. The further it goes the higher the risk of a more significant correction when the reality of higher rates and reduced tax revenue helping increase government debt begin to affect the economy.
A couple of charts to keep an eye on are the 10 Year Treasury Note which is hitting against its ceiling around 3 and looks like it is ready to break through to the upside which should help halt the US equities advance or at the very least slow it down a bit. This may also flow on to our market. The US volatility index is nearing support where I would be ready to see some upward movement, again negative for equities. All in all, some caution ahead. Enjoy your week.
Authorised Representative Life Plan FP AFSL 449658
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