Technicals | Jun 16 2020
It is time to take a bit off the table. We have been positive on the market since the end of March, and during the last month we have been calling for a move above 6000. As mentioned on a few occasions, you stick with the trend and let it run until you get the sign that it is over. Price action in our market last Thursday was the signal that the run is over for now and that the probabilities now favour lower levels. The market may be higher today, but the bias, in our opinion, is now to the downside. Having said that, we still believe that we are not revisiting the March lows. For the moment, at best, we get a sideways consolidation, just as we saw in March to April.
We also still believe that despite any short-term weakness, our market will have much further upside later in the year. Share markets do very well when economies are in recovery mode, and after being smashed during lockdown, they are set to improve from here. Not only that, but many investors, amateur and "professional", are still sitting on the sidelines in cash - publicly saying that the whole world and the share market are doomed, but secretly just wanting a dip so they can get back in. But let's not get ahead of ourselves. If you want to practice proper risk management, you need to listen to the market and at the moment it is telling us that it could head lower. Time to take the high beta stuff off the table, lock in those profits, and patiently wait for better levels again.
In today's report we have a chart on the S&P/ASX 200 Index to show the key levels to look out for.