Global Market Report: Outlook bearish for benchmark S&P/ASX200
- The S&P/ASX200 rally looks exhausted, with risk of a pullback
- Further downside likely for S&P500 in the near term
- WTI crude may offer opportunities following a correction
- A corrective fall for gold keeps open up the possibility for a move above $1,304/oz
- Near-term weakness is likely for natural gas
S&P/ASX200 looks overbought
Below current levels, support is located between 5,126 and 5,071, marked by the 50% and 61.8% Fibonacci retracement levels of the current level of the current rally as well as containing the 50-day moving average.
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In the longer term, given the confirmation of bullish momentum divergence at the February low, we believe a significant low is now in place with higher levels above 5,350 likely over the coming weeks.
Long term S&P/ASX200 trend
Our outlook remains bearish while below the recent high of 5,425.
Below current levels support is located between 2,007 to 1,982 region, marked by previous highs and lows as well as containing the 38.2% Fibonacci retracement level of the previous rally. We believe there is a high chance that the price will tests this zone over the coming one to two weeks.
S&P500 loses ground
In the long term, the weekly chart followed the formation of a bearish candle last week, price continues to move lower back following a test of the resistance zone between 2,075 and 2,110 marked by the late 2015 highs.
The impulsive rally from the February lows is an early indication of an improving outlook. However in order to turn bullish we would require corrective declines from current levels.
Long-term S&P500 trend
Nikkei 225 trend
In the longer term, price has also set a higher low confirming the trend remains up. Price remains within the resistance zone between 16,890 and 16,440 marked by previous highs and lows and a close above this level would suggest higher levels towards 18,500 over the coming weeks.
Long term Nikkei 225 trend
Our outlook remains neutral.
Being a corrective pattern, this keeps open the possibility of new highs above $1,304/oz. In order to be confident of this we need to see a higher low form above $1,256.96/oz followed by a higher high.
Spot gold trend
In the longer term, the weekly chart shows price has broken higher however the prior consolidation was short in both time and length suggesting moves higher in the near-term may be unsustainable.
Above current levels resistance is located between $1,392/oz to $1,433/oz marked by previous highs while support is located between $1,208/oz and $1,191/oz, marked by recent highs and lows.
Long term spot gold trend
Our outlook remains neutral.
WTI crude trend
In the longer term ,while some near-term weakness is expected the outlook continues to improve with the confirmation of bullish momentum divergence suggesting a significant low is in place and highly likely the price will move higher towards the October 2015 high of $50.92/b over the coming months.
WTI crude futures
Our outlook remains neutral. While the outlook continues to improve we do not believe now is the time to buy, preferring to wait for a correction to provide a low risk entry opportunity.
Natural gas futures
On the weekly chart, the confirmation of bullish momentum divergence at the March low suggests a significant low is in place.
While the price continues to trace out a large basing pattern, however we need to see a higher low form for the pattern to remain valid.
Natural gas long term trend
With price likely to move lower over the coming weeks we are now updating our outlook to short-term bearish.
– Edited by Robert Ryan
James Woods is a global investment analyst at Sydney-based Rivkin Securities