Technicals | Aug 12 2014
By Michael Gable
After spending all last week in the red, it was only a matter of time of course that we should see our market now head higher. What is interesting to note is the oversold nature of the Dow Jones and how a rally now in the US markets will see our market turn around and track higher. In today’s report we include a chart of Dow Jones to show you the precedent for this. With a big week of company reports, we also have enough domestic news to drive markets onwards. This week we see big name companies such as CBA, TLS, CSL, and WES report their results and due to their market caps, we expect any positive/negative views to affect the index, but after the recent sell-off, we still view the risk to be to the upside.
Dow Jones Industrial Average
The recent sell-off in the Dow Jones has seen it become slightly oversold on the daily RSI (circled). However, looking back over the last two years, you will notice that this has happened on 4 prior occasions. Each time the Dow Jones has gone on to rally higher. The last time this occurred was in February and we also made note of this at the time. Now that the Dow Jones has become oversold again, we believe that it should resume the uptrend. There is a possibility however that it could only hold here for a few days and then dip back down slightly, but the greater risk and potential is to the upside and over coming weeks, irrespective of whether it has another little dip or not, is to see it gravitate back above 17,000.
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Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)
Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.
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
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Disclaimer
Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). 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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