Dow Jones Was Oversold

By Michael Gable 

Last Tuesday we touched on the possibility of the sellers getting washed out of the market for the time being and support being found at 5050. That managed to be the case and with the Dow Jones being oversold, our market was poised to recover some of those losses. We have a busy week in terms of news flow with updates from ANZ Bank and Macquarie Group today, half year results from Commonwealth Bank and Computershare tomorrow, and Rio Tinto and Telstra on Thursday. Markets await Federal Reserve chairman Janet Yellen’s speech tonight, but given the sell off from the previous few weeks, chances are that markets will look for reasons to buy again. If there is a sell-off, it will be very short term.
 

Dow Jones Industrial Average

I distributed this chart of the Dow Jones last Wednesday when our market was at its low point. It shows a daily chart of the Dow Jones and how it had become oversold using a simple RSI. This has only happened a few times before in the last two years and the result was that the Dow Jones then found a turning point and proceeded to rally higher over coming weeks. As a result of this oversold nature appearing, you would have to think that there is a good probability of that happening again. It definitely appears to be the case so far, looking back at the past few days. So while a retest of last week’s low can’t be out of the question, the general trend over coming weeks at this point in time would have to be to the upside.
 

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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

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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