Tuesday, June 7, 2011

S&P/ASX 200


The chart above is the daily chart of the S&P/ASX 200 cash market. As we can see, it has been contained nicely in the lower rising channel since May 2010, but recently broke below it and it headed to the trendline drawn. Given the recent barrage of bad news, especially the poor unemployment report in the U.S and the unexpected drop in non-farm payrolls, one would be tempted to go short on the basis that the U.S might head back into recession in the near future. However, i beg to differ. Therein lies a great long opportunity after the S&P/ASX 200 has fallen about 460 points from the top on 12th April, a retracement comparable to the one made earlier( see red box) Even if it is poised to break further down below the rising channel, i think a relief rally is due here and there is still good money to be made. Besides that, from a contrarian perspective, there is enough pessimism built up to sustain a move up to at least the middle channel line. One should look out for base building action, or initiating buying for confirmation of the continuation of the uptrend. The strong swing up and down nature of the S&P/ASX 200 means one should be looking for a swing trade should the opportunity arises.

No comments:

Post a Comment