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ASX200: On Shaky Ground

Technicals | Jul 15 2019

By Craig Parker, asset manager, Moat Capital

ASX 200 on shaky ground! The short-term technical analysis would suggest that we might be heading back towards the 60-day moving average. If you look at the volume on the ASX 200 weekly chart and I must admit you have to look hard and it is only slight, but the recent equities upturn has conversely illustrated a slight descending trend in volume. The Materials sector is also weakening and is hitting against a possible new resistance level which is the peak hit back in 2011. Unless the Financials sector has a big surge the ASX 200 is going to struggle hitting that all time high.

Let's hope I'm wrong and I could be considering the S&P 500 weekly chart below has hit all time highs and is consolidating its long-term uptrend. This contrasts with the Dow Jones Transportation Index with the weekly chart still in a down trend and nowhere near all-time highs. The other chart to look at for emerging risk is Gold with, the weekly chart below showing signs of consolidation before a possible launch into its now confirmed primary uptrend.

Also, on the risk side is the US volatility chart which is nearing old support levels so we should expect some spike in volatility in the coming weeks which would mean a downturn in equities. More worryingly, closer to home is the Shanghai Composite chart which recently peaked lower than the previous peak indicating a short term down trend and weakening price action. It will have to go below 2822 to be back in a more concerning secondary downtrend so, we have a little nervous wait over the coming weeks.

The final chart I will comment on is the Russell 2000 weekly chart which is struggling to consolidate above the 40-week moving average and form a higher peak. If it falters and fails to form a higher peak, then this could be an early warning signal to the larger cap companies in the S&P 500. Enjoy your week!

ASX200 daily

ASX200 weekly

ASX200 materials monthly

S&P500 weekly

Dow Jones Transports weekly

Shanghai Composite weekly

Russell 2000 weekly

USD gold weekly

S&P500 VIX weekly

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