Technicals | Oct 03 2023
By Michael Gable
The past week has seen a fairly flat performance from the Australian market. It seems to be finding support near the 7000 level at the lower part of the trading range.
However, price action today will once again severely test the resolve of market participants. The concern continues to be rising bond yields.
Inflation is coming down, employment remains strong, and leading indicators are looking promising. However, this is causing concerns that the economy is looking too strong, and hence the thought that rates will stay higher for longer.
That sentiment seems very widespread and the spike in bond yields these past few weeks continues to look like a blow-off top.
Rising yields now seems to be a very crowded trade, so if markets can hold in here and rates then normalise, that will set markets up for a recovery into the end of the year.
Rates won't continue higher at this rate; they will over-extend (or maybe they already have?) and then mean revert.
At this stage, we think it is prudent for look for that to happen and position accordingly, rather than chase the final moments of something which has already run very hard.
In this week's report, we have an updated chart of the S&P500 Index.
The S&P500 Index has pulled back to our target which was between 4200 and 4300.
We can now see it sitting right on the trendline that started in October 2022 and the 200-day exponential moving average.
For now, it seems to be finding support but ideally, we would like to see a push above about 4350 to turn positive. If this trendline fails, then the next target down is about 4180.
Content included in this article is not by association the view of FNArena (see our disclaimer).
Michael Gable is managing Director of Fairmont Equities (www.fairmontequities.com)
Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services.
Michael is RG146 Accredited and holds the following formal qualifications:
• Bachelor of Engineering, Hons. (University of Sydney)
• Bachelor of Commerce (University of Sydney)
• Diploma of Mortgage Lending (Finsia)
• Diploma of Financial Services [Financial Planning] (Finsia)
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2
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Disclaimer
Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
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