Technicals | Mar 25 2019
By Craig Parker, asset manager, Moat Capital
Another week going nowhere as can be seen by the trading range below on the daily ASX 200 chart. Trading ranges can transpire for lengthy periods of time but based on how narrow this recent one is next week will see a breakout either to the upside or the downside. The analysis would suggest to the upside however the S&P 500 had a bearish range overnight accompanied with a short term down trend on the Dow Jones Transportation Index as illustrated on the chart below by the descending tend line.
One factor helping keep our market afloat and something I haven’t touched on for some time is our dollar which is now hugging the downside of the 60 day and 200 day moving averages. It continues to be bearish in its price action especially on the daily chart. The weekly chart has some significant bullish divergence forming which I wouldn’t place a lot of weight on, at this point in time especially, considering the expected drop in rates in the coming months due to weakening economic growth and housing downturn. I would expect to see further weakening and hope that this helps buffer our ASX 200 into the future.
Speaking of the future this next election is one the parties don’t want to win as they will get blamed for the inevitable recession on the horizon due to policy ineptitude that has gone before them and global macro forces out of their control. Notice the [US] 10 Year Note Minus the 3 Month Note below dropped by 9 in the past week and is just 5 away from going into the negative which we all know is over a 90% chance of a recession in the next 6 to 18 months. In summary there isn’t much to expand on from last week except that the next week will be pivotal in the short-term direction of the ASX 200, but I would like to point out that the ever-important market barometer being the Financials chart is at an interesting point. The first few days of next week will be critical as it is currently sitting right on the medium-term daily uptrend line after a good counter trend and is poised to break back up and continue the uptrend. Based on this I would expect the short term to be positive. Enjoy your week!
ASX200 daily
ASX200 financials ex-REITs daily
S&P500 daily
Dow Jones Transports Average daily
AUDUSD daily
US ten-year minus three-month yield
Authorised Representative Life Plan FP AFSL 449658
Important Information
This message contains privileged and confidential information intended only for the use of the addressee named above. If you are not the intended recipient of the message you are hereby notified that you must not distribute, copy or take action in reliance of the information contained in this message. If you have received this message in error, please notify Life Plan FP immediately. Any views expressed in this message are those of the individual sender, except where the sender specifically states them to be the view of Life Plan FP.
This email message is intended only for the addressee (s) and contains information, which may be confidential. If you are not the intended recipient please do not read, save, forward, disclose, or copy the contents of this email. If this email has been sent to you in error, please delete this email and any copies or links to this email completely and immediately from your system. The information in this email is not to be taken as taxation, investment or personal advice and is only an indication of the views of the writer and cannot be relied upon by the receiver. Should the information be acted upon the receivers are doing so at their own risk. If the receiver requires this advice to be used and acted upon they will require this to be presented on the letterhead of the writer. Life Plan FP have made every reasonable effort to ensure the information provided is correct, but Life Plan FP makes no representation or any warranty as to whether the information is accurate, complete or up to date. To the extent permitted by law, Life Plan FP accepts no responsibility for any errors or misstatements, negligent or otherwise. The information provided may be based on assumptions or market conditions and may change without notice.
Reprinted with permission of the publisher. Content included in this article is not by association the view of FNArena (see our disclaimer).
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On
