Sunday, 27 December 2015

ASX 200 Santa rally is a gift for the bears, as trend remains down

The Santa rally by the ASX 200 looks to have been a gift for the bears, with the market remaining in a down trend, and the rally taking it close to resistance. To spell it out, risk management levels for potential short positions are now close by.

Daily chart all sessions shows the market is trending down and testing resistance.

Daily chart of the cash market illustrates a bearish continuation Head and Shoulders pattern. Market action could also be viewed as a simple trading range. Trade the range until it breaks is axiomatic. So any rally to the top of the range should be sold.

The following weekly chart illustrates the market action after the 2007 peak atop the action so far after the 2015 peak. So long as the 40 week moving average caps any rallies going forward, the trend remains down and a 2008-style cascade decline is on the cards.

Monthly chart shows my long held Elliott Wave count. Unless the market soon rallies through all the key upside levels shown in the preceding charts, I expect the market to fall under 3000 within the next year.