Technicals | Nov 30 2010
By Rudi Filapek-Vandyck
Investors have seen this spectacle many times before this year. All it takes are a few weeks of persistent weakness in global share markets and next thing we know technical chartists are talking "watershed moment"; it's either make or break from here onwards. Last week, FNArena reported the number of chartists with a bearish view, issuing warning messages to investors, was on the rise. This week has proved no different.
Our own TechWizard updated his thoughts and views yesterday afternoon and he too remains of the view that if this market continues to face downward pressure, we may yet see some real weakness kick in. This would mean: say sayonara to the prospect of a Xmas rally this year.
All is not lost just yet, reports the Wizard, though the market does look fragile at present technical levels.
It is the Wizard's observation that Bollinger bands for the ASX200 index in Australia are opening up while the 20 moving average (m/a) has turned south. Both are negative signals, he points out. Thus far key support at 4550 has held and it is his view this is about the last straw this market can hold on to. Were 4550 to give away on a weekly closing basis, he would agree with the bears that more weakness lies in store. The Wizard is talking "serious downtrend".
Says the Wizard: as long as 4550 holds there remains a decent chance of a Xmass rally to finish the year, but if broken on a weekly basis then 4300 comes into play.
The TechWizard is the pseudonym of Scott Morrison, whose experience in financial markets exceeds twenty years. Morrison operates his own website nowadays at www.techwizard.com.au. The views expressed above are the TechWizard's, not FNArena's (see our disclaimer).
