ASX200 Testing 5000, AUD/USD Testing 0.70

ASX200

As much as the ASX200 index has been relying upon the key 5000 level for support, the index has now fallen to its lowest close in over two years. Fortunately for the index, it remains quite close to the key 5000 level and is still able to enjoy solid support and demand around this level.  It will be hoping for some demand to kick in around its present levels however the sentiment remains bearish and any rally higher is likely to be short lived and eventually consumer by selling.

The ASX200 continues to form a classic descending triangle with declining peaks at 5305, 5220 and more recently at 5200 whilst the support remains steadfast around 5000. It is this level that is of course under pressure presently and being heavily scrutinised.

XJO_20150924

The index volatility remains high and has moved higher to near 1.8%, which sets a new four year high. This tends to indicate more irrational behaviour than normal and can be a trigger for some investors to step out until the market calms a little. (seen at the top of the above image)

Quite a few stocks remain resilient to the general market falls with several achieving new all time highs in the last week, including Sydney Airport (SYD), TPG Telecom (TPM) and Blue Sky (BLA) reaffirming that opportunities remain despite the general market conditions.  Further there are numerous stocks continuing to push higher and ignore the conditions including Austal (ASB), Blackmores (BKL), and Qantas (QAN).

BHP continues to struggle and is getting perilously close to recent lows around $22.50 which if broken would result in a seven year low.  Telstra has finally felt the effects of the market falls as it has also drifted lower in the last month or so and is presently enjoying some much needed support from the $5.50 level. Origin Energy continues to bring up the rear as it has fallen again to reach multi-year lows and levels not seen since 2006. Even worse is how much more volume has accompanied the selling in the last month or so. Likewise Woodside Petroleum is close to moving to 10 year lows.   Woolworths is also in a precarious position receiving some support around $24 but very close to falling to new lows not seen since 2007, highlighting its current fortunes and the difficult retail environment.

CSL continues to hold up well and remain quite resilient to the general market trend as it remains well supported by a range between $85 and $90, and more recently the $90 level. Likewise Macquarie Group is doing well to stay within reach of $80 as it remains within reach of its 2015 high. Scentre Group and Westfield are also remaining close to 2015 highs and ignoring the general market trend.

AUD/USD

Over the last few days the Australian dollar has fallen away from the key resistance level at 72 cents which has seen it revisit the more significant 70 cents level. It is likely to enjoy a measure of support at this level however the bearish sentiment currently surrounding the Australian dollar is likely to see it drift further.

Interestingly the long position ratio amongst OANDA clients remains at 55% indicating that the majority still have the expectation of the A$ rallying in the future.

AUDUSD_Ratio

Earlier this month this figure was above 65% so the recent declines have resulted in a shift towards a more short stance. Further declines below the key 70 cents level may see this ratio between longs and shorts move even further.

 

Stuart McPhee
Stuart McPhee
Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.