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ASX200: Change In Momentum?

Technicals | Apr 29 2019

By Craig Parker, asset manager, Moat Capital

So, we made it! We have climbed back up the mountain that was reached back in August 2018. I was a doubter and happy to be proven wrong. Apparently, some things never change, and we are back to bad news on the economic front being good news for equities. The big question on my mind is the past weeks bullish range and whether it is an exhaustive move or a change of momentum now that the peak is going to be higher than the previous major peak.

The daily chart didn’t have higher than average volume, so it is hard to tell. I am leaning more towards an exhaustive move and a counter trend is on the short-term horizon. The extent of the counter trend will then help determine the medium to longer term outlook. Another chart to watch is the monthly chart which theoretically if next Monday and Tuesday have down ranges the peak may still be lower than the previous peak set in August 18.

You can also look at Gold and it is sitting on the 40-week moving average which is likely to provide some support and China didn’t have a great week last week with a decent pullback from its recent run up both, of which could signal some short term headwinds. I have been suggesting short term tailwinds and medium to long term headwinds however I am looking to add the short term to the headwind list.

On the fiscal front we are sick with an economy that is as diversified as Sudan and a government (including governments that have gone before them) hell bent on doing nothing about it. I fear we have missed the boat on this front and with the globe needing less of our coal and prices for Iron Ore and demand to wain our economy is in a precarious position. And with only a couple of rate cuts in the armory we are in trouble. Hate to be the next government. As far as sectors go and from a cyclical perspective I like the look of the Telecommunications sector long term with bullish support around the 40-week moving average. Enjoy your week!

ASX200 daily

ASX200 weekly

ASX200 monthly

Shanghai Composite weekly

USD gold weekly

ASX200 telcos service index weekly

Authorised Representative Life Plan FP AFSL 449658

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