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
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