Technicals | May 13 2019
By Craig Parker, asset manager, Moat Capital
As discussed in my previous report, our local ASX 200 decided it needed a break from the up-trending momentum and had a small pullback below the 6350 peak. Technically it is still in an uptrend and this will hold unless the daily trough goes below 6180 or the next move up fails to go above 6380 on the daily chart. I suspect we will see some bearish divergence on the RSI and the ASX 200 struggling to get above the 6350 area.
This could all change next Saturday depending on who wins the election. If the Liberal party wins then there could be some positive market momentum and if Labor wins, it’s possible it will be negative for markets however this will be short term and provide good buying opportunities until investors realise the franking credit policy isn’t as bad as it has been made out to be. Irrational investors always overreact to change. Hopefully investors will then refocus on an investments total return and not just it’s income and franking levels. Whether you draw your retirement income from a shares growth or income is irrelevant it’s all return. As mentioned previously I don’t envy whomever gets in because they have zero control over the China/US trade wars and the global slowdown which will inevitably hit us.
Back to the technical side of things and a look globally and you will find things are looking a little grim. The S&P 500 is nestling along the 60-day moving average and it will be interesting to see whether next week breaks below this average and moves down towards the 200-day moving average. It was a good sign that the Friday range finished on the bullish side however this could signal an exhaustive move. The Dow Jones Transportation Index is bang on the recent uptrend line which is another area to keep an eye on and whilst we are looking at key charts look at the Hang Seng Index weekly chart below. Last week was very negative.
Clearly the trade war is going to hurt China. China will ensure that it also hurts America which isn’t great for any of us. To finish on a positive, note the US volatility index has come off and looking to settle back down into the support area. All in all, next week looks like it could be a quiet one. Enjoy your week!
Dow Jones Transports Average weekly
Hang Seng weekly
S&P500 VIX daily
Authorised Representative Life Plan FP AFSL 449658
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).
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