Technicals | Jan 30 2017
By Craig Parker, asset manager, Moat Capital
You don’t always get exactly what you want. I mentioned I would’ve like to have seen our market down between the 5500 – 5600 level before taking off again. It seems the breakout on the S&P500 I mentioned to look out for was mid-week and off we go again from around the 5600 level. We are now looking to the 6000 level in the coming weeks barring any adverse event. On the positive side, Iron ore has consolidated above the $80 mark and Oil is also providing some further consolidation above the $50-barrel mark.
From a technical point of view Iron Ore does have some bearish divergence on the RSI weekly chart. This could be something to keep an eye on in the next week or two as this could affect the S&P/ASX 200 slightly. Another indicator to look out for is our volatility index which has broken down forming a clear peak on the daily chart lower than the previous which, confirms possible further movement down in the current downtrend. This can be good news for our market in the short term as the VIX reaches lower and subsequently equities reach higher.
At the moment, it is still all about Trump and it will be interesting to see how much geopolitical tension the markets can bear in the coming weeks and months when Trump's protectionist policies and attitudes are fully on display. This excludes the home-grown issues he is going to face, further dividing the nation on his anti-science, immigration and feminist issues. Interesting times. The world is apparently flat again.
ASX200 daily
Iron ore weekly
S&P500 daily
ASX200 VIX
Authorised Representative Sentinel Private Wealth AFSL 344762
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