Technicals | Dec 12 2016
By Craig Parker, asset manager, Moat Capital
Onwards and upwards we go! It seems that we are back to bad news is good news again with a negative quarter GDP result and a sharp rise in the equities market. Perhaps investors are thinking the next rate move is down or they are just pleased it’s not up. The Trump rally continues and I wonder what Donald is thinking, considering in one of his debates he mentioned the stock market was in a bubble. I’m sure at some point he is keen for an I told you so moment and swiftly shift the blame over to Yellen and Obama.
Onto the technical analysis and looking at the weekly S&P/ASX 200 chart below the retracement I was talking about needing a week ago, wasn’t much of a retracement at all. It can be seen a little clearer on the daily chart and it was week at best. On a negative note the steeper the move up, generally the steeper the counter trend down. Looking at the S&P/ASX 200 daily chart you will notice that the market generally doesn’t go too far without reverting to the 60-day moving average (in red) unless it is coming off a very low base. On a positive note the trading range didn’t eventuate and we are now in a technical uptrend on the daily, weekly and monthly charts which, is great news for the medium to longer term (3 to 6 months).
The monthly chart reduces a lot of the market noise and based on the S&P/ASX 200 recently moving into a monthly short-term uptrend and if December ends above 5560 we would look for a peak around the 5750 level in the coming months. In the short-term I, will be looking for things to settle down a bit with the Fed raising rates and the US market having had a very hard run up.
ASX200 Daily chart
ASX200 Weekly chart
ASX200 Monthly chart
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.