Technicals | Aug 07 2012
The TechWizard reports he remains unconvinced risk assets have now embarked on a new, sustainable uptrend. His technical analysis shows while global equities are enjoying some strong gains this week, the underlying strength has remained rather weak.
One of the indicators the Wizard likes to use is the ADX-DMI which is widely used by traders to gauge "market direction" and "strength". Alas, the indicator is suggesting inner strength is currently absent, reports the Wizard. To make matters worse, last night's price action in the US generated a sell signal on the Wizard's trading system. He's now expecting a handful of days of downward pressure to kick in.
Setting a simple target, the Wizard wouldn't be surprised to see both S&P500 and DJIA retreating below the 20 moving average which, expressed in index points, implies the S&P500 could well lose some 50 points while for DJIA the losses implied would exceed 500 points.
All in all, no disasters are anticipated, but downward pressure nevertheless.
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. All views expressed are the TechWizard's, not FNArena's (see our disclaimer).
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
