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ASX200: Time For A Retracement?

Technicals | Jun 17 2019

By Craig Parker, asset manager, Moat Capital

Is it time for a retracement? Secretly I am hoping this recent ascending move has a bit left in it considering I have some call exposure. Interestingly June 2018 through August 2018 the peaks in the market were moving higher but each peak on the RSI moved lower. In the end there were about 4 peaks lower on the RSI. Currently we are closing in on 5. We have moved well away from the 60-day moving average and a long way from the 200-day moving average. If you look at the price action in the daily chart you will notice that in the past few years whenever the price has moved this far away it soon retraced back to the averages.

I mentioned a couple of weeks ago that we had a few weeks of optimism left and we are now about a week away from that estimate. The same can be said for the weekly chart and the 40-week moving average. The monthly chart on the other hand looks great and amazingly we are just a couple of hundred points off the resistance line on the up-trending channel and our all time pre GFC high. Let's see if the RBA can weave their magic and get us there in the coming 6 months. They have done their job on the Aussie dollar front with a drop last week and now nearing the support line around 68 with a drop below into free fall territory.

Some other points of a technical nature are below:

  • On the seriously negative side of the equation the S&P 500 is looking very sick from a technical perspective.
  • Confusingly and on a slightly optimistic note Gold investors just couldn't muster up the courage to break through the 1350 barrier. This is one barrier to watch as a break up through here spells problems for equities.
  • Listed Property Trust sector is enjoying the lower interest rate environment.

In summary the recent ascent in the uptrend is running out of puff with hopefully some sideways action before some further gains getting us closer to the all-time highs. Enjoy your week.

ASX200 daily

ASX200 weekly

ASX200 monthly

ASX200 REITs weekly

S&P500 weekly

USD gold weekly

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Authorised Representative Life Plan FP AFSL 449658

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