Technicals | May 22 2017
By Craig Parker, asset manager, Moat Capital
And the clouds finally relented with the pressure of the ongoing White House scandals and the ever-increasing political pressure on the big banks to help with fixing the budgetary issues and inflated housing prices. On the technical front the S&P/ASX 200 is now in a short-term downtrend with the financials sector being the main driver of the fall considering the materials sector fared quite well this week with some recovery in the Iron Ore price.
Where to from here is anyone’s guess as the financials sector is fighting to find a low. In the financials’ favor is the fact that it is nearing a previous low on the weekly chart, a level which will need to be watched closely. A break up could indicate support and a break down below this low would confirm a medium-term downtrend and possibly further downward momentum. As far as the overall market goes the next level of support to look out for is around the 5600 level. If you are looking a little further down the track then there is a worrying technical sign on the monthly chart with a peak no higher than the previous. The next week might see some consolidation with the US markets overnight recovering slightly, however the recovery ranges are short and I would be watching the 21000 level on the Dow Jones in the coming week to see if it can be broken, providing a positive sign.
If you are a Dow Theorist you may be a little on the negative side with the Dow Jones Transportation index (sometimes used as a leading indicator to the Dow Jones Industrial Index) having moved into a confirmed downtrend on the weekly chart with a lower high than the previous. However, it is at a previous low so some support could be forthcoming. Is this the start of a larger downturn or just a counter trend in an overall long term uptrend? All in all, it is going to be an interesting week ahead with the market and various key sectors at important technical levels.
ASX200 daily
ASX200 weekly
ASX200 monthly
ASX200 Financials ex-REITs weekly
Dow Jones Industrial Average weekly
Dow Jones Transportation weekly
Authorised Representative Sentinel Private Wealth AFSL 344762
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