Technicals | Jun 30 2010
By Rudi Filapek-Vandyck
Following what looks like an extremely weak ending for this year's month of June, investors might draw some consolation from the fact that historical analysis by technical market analysts at Barclays has revealed the S&P500 rises on the first trading day in July no less than 81% of the time.
The TechWizard, however, warns present weakness across global equity markets is not a good omen.
The Wizard notes both US indices as well as major indices in Australia seem to be carving out a head-and-shoulders formation on price charts, which would suggest much lower levels should be expected for the months ahead.
Surely, says the Wizard, the fact that the second shoulder is a rather weak one suggests equity markets are lacking strength (other chartists have doubted the head-and-shoulders formation's importance because of the rather weak right shoulder).
Adding to the Wizard's negative view is the fact the 20 moving average has proved too strong resistance for both US indices as in Australia.
The prospects for the Dow Jones Industrial Average to close below 10,000 on a weekly closing basis, and the ASX200 below 4175, are looking more and more feasible, says the Wizard.
Were this the case, the Wizard believes much larger losses should be expected.
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