Technicals | Dec 05 2016
By Craig Parker, asset manager, Moat Capital
It seems the 5500 barrier was a barrier too far for the S&P/ASX 200 this week. As I mentioned last week I would like to see a retracement however, it would’ve been more positive if the market peaked further above the 5500-resistance level. The momentum indicators on the daily chart below are converging and looking like rolling over, at least in the short term. On a positive note, they are not largely over bought so a large correction is unlikely. If you look at the weekly chart and the monthly chart the momentum indicators are neither overbought or oversold.
The monthly chart is still effectively in a long-term upward trending channel. Interestingly our market is in the lower half of the channel which suggests good buying from a technical point of view, assuming your view is longer term. With the weekly chart, there is now some resistance against an old uptrend line. This will come in handy for further advancements into the future when looking to predict possible peaks.
In summary, the short-term is looking a little shaky and it seems we might be heading back into a trading range between the 5200 and 5500 levels. Hopefully it doesn’t last as long as the previous trading range which went from mid-2015 to mid-2016. Caution awaits in the short term and a lot will depend on the S&P 500 which is also illustrating signs of rolling over from a momentum perspective. More concerning from a short-term point of view is the Dow Jones Transportation Index which is very overbought on the daily RSI.
ASX200 Daily
ASX200 Weekly
ASX200 Monthly
Authorised Representative Sentinel Private Wealth AFSL 344762
Important Information
This document and its contents are general in nature and do not constitute or convey personal advice. It has been prepared without consideration of anyone's particular financial situation, needs or financial objectives. Personal advice should be sought before acting on any of the areas discussed. The authors and distributors of this document accept no liability for any loss or damage suffered by any person as a result of that person, or any other person, placing any reliance on the contents of this document.
Moat Capital has made every reasonable effort to ensure the information provided is correct, but Moat Capital makes no representation or any warranty as to whether the information is accurate, complete or up to date. To the extent permitted by law, Moat Capital accepts no responsibility for any errors or misstatements, negligent or otherwise. The information provided may be based on assumptions or market conditions and may change without notice.
Reprinted with permission of the publisher. Content included in this article is not by association the view of FNArena (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.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
