MARKETS SPECTATOR: Lucky seven
Markets have been up for seven sessions in a row. That's quite a winning streak for the ASX but can traders' luck hold out?
SPI futures are indicating our market will open around the 4491 level or flat on the session. However, given the big push higher we saw on Friday and the seven consecutive up days we’ve had in a row, we feel the market is vulnerable to some profit taking.
As you can see in the above chart, the local bourse has been up for the last seven sessions, which in anyone’s language is a very strong run. However, it is also considered quite overbought or extended on a short-term basis.
It is not that often at all that you see moves in either direction of seven consecutive sessions and when you do it is generally accepted that the further they move, the more likely they are to undergo some sort of a pullback or correction.
Hence, we feel there is some downside risk to today’s market and a fairly likely chance that we see a correction of some magnitude during the week. The blue resistance line that the market finally broke up through last week now becomes support where we would expect some buying to re-emerge if the market does pullback.
During today’s session the only things to note are an RBA speech from Governor Glenn Stevens at 9.00am and ANZ job advertisement numbers due at 10.30am.