Technicals | Sep 21 2021
The market is in sell mode. We noted last week that it was looking tired and we had a chart of the S&P/ASX 200 Index to show you the first warning signs that we may expect lower levels, and what the triggers would be for you to hit the sell button and get defensive. Price action in the last couple of days has confirmed that. The steady rise over the last year has made it seem all too easy but knowing when to hit that sell button is the most effective way to achieve the best long-term returns.
Having said that, a bit of market weakness is not the time to throw in the towel and step away from the market. The silver lining in all of this is that taking a bit of heat out of the market will reset a lot of stocks to lower levels and give us some much better set-ups. We may have weakness for only a few days, or it could be several weeks. But at some point, we will get some great opportunities which should prove to be more sustainable and profitable than those seen during the last few months.
I will be sure to share all those as soon as I see them. Pullbacks in share markets prove to be great opportunities. Today's research focuses on the S&P/ASX 200 Index (XJO).
We provided a warning last week that the index was indicating that it wanted to head lower. The gap down yesterday and the breach of the low from 9 September (which we warned would be a negative) has now firmly put the index into "sell" mode. The market has some obvious support levels almost at every index level rounded to the nearest hundred. The nearest Fibonacci support level is back near 6400. However, it is too early to figure out at which level the selling will stop. Whether we find a low today or in several weeks from now, we need to watch price action to give us those clues. For now, the risk for the index is to the downside.
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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
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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