Friday, 13 June 2014

ASX 200 headed for weekly close below trend line drawn from 2011, 2012, and 2013 lows?

The weekly chart below includes futures trade, and although we are pre-open on this Friday the 13th of June, it begs the question, will the ASX 200 close below the trend line drawn from the 2011, 2012, and 2013 lows? If it does, with the S&P 500 breaking down, look out below! The ASX 200 has underperformed US and European indexes since the 2009 lows. Contrary to popular belief this does not mean it is a relatively good/cheap buy, it means that the ASX 200 is much weaker than those other indexes, and will likely lead on the downside if global stocks decline.

S&P 500 breaks below key trend lines, rally from 2009 low could be complete

The S&P 500 has broken below key trend lines on the hourly, daily, and weekly charts. I believe that these breaks could indicate that the rally from 2009's low is finished, and that the market is making its first baby steps toward a test of those 2009 lows. Read up on bearish/rising wedges and Elliott Wave ending diagonals if you need to. That said, nobody knows what will happen in the markets. So swapping my blogger hat for my trader hat, I will simply say that in my view these breaks offer a bearish edge, so long as this week's high is not broken. I know how many $$$ I am risking on any given trade, and I'm comfortable with my risk levels, so if I have a losing trade, no biggie, I look for the next edge. That's not a recommendation to take action, merely a statement of my current views.