article 3 months old

ASX200: Reached The Peak

Technicals | Jul 01 2019

By Craig Parker, asset manager, Moat Capital

Not much to report about last week from a local point of view. Looks like we have reached the peak and taking a rest to enjoy the view. Technically on the ASX 200 we are once again stuck in a short-term trading range although, based on Friday’s range it looks like we will be heading back towards the 60-day moving average. A positive sign for us is the transition from developed markets to the developing markets.

The charts are indicating a shift in dynamic with the emerging markets coming up from a long term down trend and the developed markets such as the S&P 500 peaking at the top of a long-term uptrend. If you look at the weekly chart of China as represented by the Shanghai Composite below you can see it has moved into a medium-term uptrend and bounced off the 40-week moving average which is positive. Compare this to the US S&P 500 and it is looking sick with significant bearish divergence on the RSI. The EURO STOXX 50 weekly chart looks even sicker with its bearish RSI divergence. Over the medium term lets hope our fate is tied more to China than it is to the US.

Locally two charts which sum up our market comeback of late, the Financials and Materials weekly charts with the Financial sector looking like it has more room to move to the upside and the Materials sector looking like it needs a break from its accelerated ascent. How far can Iron Ore prices go? BHP loses a few billion on the dam disaster whilst making a few billion on the rise in Iron Ore prices. Perhaps more based on the meteoric rise in the share price of late. In summary going forward looks like a battle between the developing markets and the developed markets. Will be interesting to see who wins. Enjoy your week.

ASX200 daily

ASX200 financials ex-REITs weekly

ASX200 materials weekly

S&P500 weekly

Euro Stoxx 50 weekly

Shanghai Composite weekly

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