Technicals | Jun 15 2010
By Rudi Filapek-Vandyck
From a technical perspective, the S&P500 index failed to climb and stay above its 200-day moving average at the end of Monday's session. Yet, not every market commentator is convinced this spells bad news for the immediate outlook for global equities.
The Nasdaq, regarded as the real leader this time around, is well and truly trading above its 200-day moving average, partly fuelling ongoing optimism among the less-bearish minded market commentators.
Regardless, chartists here and there continue pointing out the S&P500 is likely to find it tough to break above the 200-day moving average. This is because the index is facing several points of resistance in between 1,106 and 1,114 – the 200-day moving average is only one of these resistances.
There is also a Fibonacci retracement level at 1,109 plus a price gap on charts that was formed on the one-hour chart between the June 3 closing low of 1,100 and the June 4 opening high of 1,098. This, chartists say, must be closed.
Also, while some commentators point out the US market might be forming a base above the recent low of 1041, others continue to be of the view the market is forming a multi-month top instead.
This apparent ambivalence in technical signals (interpretation?) probably explains why equity markets throughout Asia remain cautious and without any real direction on Tuesday.
Note: leading indices in Australia are equally trading (well) below 200-day moving averages and 50-day moving averages recently broke below 200 M/A for both the All Ordinaries and the ASX200 index.
