ASX200: Volatility A Cause For Concern

Technicals | Feb 02 2021

By MichaelGable

A week ago, it looked like the Australian market was breaking higher but a sell-off at the end of last week has taken the positive shine off the S&P/ASX 200 Index for the time being. With volatility remaining at elevated levels, there is the real risk that the market could see further downside in the short-term. In today's report we have a chart of the S&P/ASX 200 Index to demonstrate the key levels.

The ASX200 (XJO) had been trading in a narrow range for much of December and January. It broke free of that range two weeks ago and looked set to head higher. Last Thursday, however, it was comprehensively sold down back into the range, with very poor price action also seen last Friday. Yesterday saw the market bounce off the lower part of that range to put it back on par with Thursday's closing level. The XJO is now back in its narrow range, but the failure of the upside break to stick, and the added volatility, is now a cause for concern. An upside break again would be welcome, however, there is still a risk here that the market breaches the lower level near 6,600. A fall under 6,600 would be viewed as a clear negative for the market.

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Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services.

Michael is RG146 Accredited and holds the following formal qualifications:

Bachelor of Engineering, Hons. (University of Sydney)
Bachelor of Commerce (University of Sydney)
Diploma of Mortgage Lending (Finsia)
Diploma of Financial Services [Financial Planning] (Finsia)
Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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