by Chris Becker
It seems the total lack of newsflow and the upcoming AFL Grand Final is putting all the bulls to sleep on the ASX200 and the bears that remain might be getting nervous.
Its not everyday you see the end of a two year old uptrend:
A few technical notes before I go into the breadth of the market (who am I kidding? its miners and banks!) – There are 3 support levels marked in orange that should give this correction pause, first at around 5100 points, then at the 4900-5000 psychologically important area.
For what its worth, I think the most important metric to watch to confirm this move is the close tonight on Wall Street as this will dictate the direction coming into next week. The probability is firmly on the side of a distribution, i.e a move down to 5100 points and a range between there and current prices until the end of the year.
Like my bond piece previously, it is more than likely that an unwinding of foreign capital positions could be the go here, matched with earnings warnings potential on the banks as the Murray financial inquiry gets going.
The materials index (i.e BHP and RIO) looks extremely weak here, about to cross below support and daylight below if iron ore breaks out:
Financials look a little better, taking a breather for now and still just on trend but the inability of the market to make higher highs is weighing especially as we go into 3/4 dividend season (all the banks except CBA will go ex-dividend in the coming months):
Have a good weekend and go <sportsteam>!