ASX200: New High Ahead

Technicals | Jul 08 2019

By Craig Parker, asset manager, Moat Capital

So much for heading back towards the 60-day moving average. RBA rate cuts have done their job as predicted. Scary thing is the RBA hasn’t got a whole lot more to play with and the Liberal party wouldn’t know how to implement any type of economic reform if hit them in the face and the Labor party is a pathetic pushover. Scott Morrison did say he believes in miracles but let’s hope he is not relying on one to get us out of or at least soften the blow of the upcoming recession. Hopefully he listens to the RBA governor although, I won’t be holding my breath.

Back to the technical analysis and check out our weekly chart below and specifically the length of the recent upward movement which you will notice is on par with the previous prolonged bullish movements back in 2012 and post GFC bottom. I dare say we will hit our all-time highs of around 6850 which were reached back in November 2007 and then develop some resistance around the monthly up trending channel as can be seen on the monthly chart. The Financials chart below is very positive at the moment with consolidation above the long term down trend line and the 40-week moving average which can suggest a change in momentum. This is a good sign for our market considering Financials is the largest sector.

The other big contributor is the Materials sector and specifically Iron Ore companies with the weekly Iron Ore chart below illustrating a very steep uptrend which will come to an end soon. We really are the lucky country when the two sectors that are the biggest contributors to our market have been in lock step. Naturally luck never lasts, and we’ll see problems develop on the technical front in the coming weeks or months.

Another short-term positive is the Japanese market as represented by the Nikkei 225 weekly chart below which, has developed a higher low and broken through the 40-week moving average. If the Nikkei can set a new higher high, then that could be a time to rejoice but until then I will be holding off. In the short term lets enjoy the ASX 200 getting back to our all-time high and perhaps breaking through and setting a new one. It’s only been just over 11 years which is a long wait for those that had the nerve to hold. Enjoy your week!

ASX200 daily

ASX200 weekly

ASX200 monthly

ASX200 financials ex-REITs weekly

Nikkei 225 weekly

Spot iron ore weekly

Authorised Representative Life Plan FP AFSL 449658

www.moatcapital.com.au

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

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms