Technicals | Nov 07 2023
By Michael Gable
We had been looking for a bounce from oversold levels, and we finally got that last week.
Markets have run hard in a short period of time, and they will need to cool off slightly before heading higher, but the bounce does look sustainable.
We have spoken before about how bond yields moving up in a straight line can only lead to one thing – a move back down just as quickly. We now seem to have that happening in the US. This could therefore be a major turning point for bonds and therefore equities.
Further to that, falling yields would see a falling US dollar, and that would be a positive for gold and other commodities stocks.
Today's report has an updated chart on the S&P/ASX200 (XJO).
We have previously commented about the bullish divergence on the daily chart. Now on the weekly chart we have a clear reversal signal (circled).
The XJO should therefore head higher from here. Longer-term, the chart since mid-2021 still resembles an inverse head and shoulders where the XJO could go on to retest levels near 7600 and an eventual break of 7600 could see a multi-month rally into the 8000's.
For now, however, we will observe the possibility of some upside from here for the next several weeks and reassess as we go along.
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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