Technicals | Jan 16 2017
By Craig Parker, asset manager, Moat Capital
Are we looking at the start of the counter-trend that I have been mentioning around the 5700 level? A lot will depend on the S&P500 overnight, however if you look at our ASX200 daily chart below the MACD indicator has just rolled over with a crossover. You will also notice that the MACD has hit these levels a few times in the past couple of years and each time had a retracement. If this happens again I would be looking for some support between the 5500/5600 levels.
If you look at the ASX200 weekly chart below, we could retreat further and still be in a clear uptrend. For the uptrend to be broken on the weekly chart the market would need to drop below 5200 which is unlikely to happen based on recent positive sentiment. A positive for our market is also having the Iron Ore price sneak above the 80 level, albeit with some bearish weekly divergence on the RSI.
Going back to the S&P500 as mentioned earlier, it is illustrating some clear Bearish divergence (RSI) on the daily chart below and is hitting up against some resistance at the 2275 level. If the S&P500 were to break through this then our market will respond and head up towards the 6000 level. If the S&P500 were to correct then we will continue down around the 5500/5600 level as mentioned. The volatility index on the S&P500 is also at support levels so a jump up would mean a move down on the S&P 500.
Overall things are looking a little uncertain in the short term and some caution is required.
ASX200 Daily
ASX200 Weekly
Iron ore US$/t Weekly
S&P500 Daily
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