Sunday, 12 October 2014

ASX 200 down 10% in little over a month, breaks below trend channel support

Weekly chart shows that ASX 200 futures trade closed last week below trend channel support, having fallen 10% from the recent peak. A test of 5000 appears likely, sooner rather than later.

Recently I have been running with the idea that the ASX 200 is embarking on a 50% decline toward 2500. What must the market do in coming weeks and months if that scenario is to unfold? Simply, it must continue to decline relentlessly, or something else is transpiring. Under my scenario, market performance should echo the decline from late 2007 to early 2008, where the ASX 200 lost 25% within five months of the peak. A similar decline from the September 2014 peak would see the market decline to 4300 or so by late January 2015. Let's see.