ASX 200 Breaks 7 Month Uptrend On US Market Selloff

The ASX 200 dropped around 120 points or 2.2% today, breaking its 7 month uptrend that began in early February following the sell off in the US markets on Friday over rate rise concerns. The ASX 200 had previously climbed by over 900 points over the 7 month period from the February lows of 4707, to the high for the year of 5611 that was reached on the 1st of August.

You can see within the chart below the clear break of its uptrend circled in black, and the next support level around 5050 which is 169 points away from today's closing price of 5219.

The earnings season finished 2 weeks ago, however the ASX 200 has experienced a series of down trading days from the 5550 level to today's level of 5219, as the market digested sub par earnings results, as well as several companies going ex - dividend with decent dividends provided to shareholders.

If the ASX 200 is unable hold the support level at 5050, the next level is around 4770/75 which is unlikely to be reached in the short term. With the more likely outcome the ASX 200 will move to the 5050 area and bounce off that level initially, as the ASX 200 will consolidate within the new support area.

On the remote possibility that the FED actually raises rates on the 22nd September to 0.50%, then all bets are off with the likely reaction from the markets to be severe, as the markets would fall sharply similar to the volatility that was experienced at start of the year, which you can view on the chart below.

Following up on the recent review of bank stock CBA on a recent post see - Stock In Review - Commonwealth Bank (CBA). I have added today's updated chart of CBA which shows that during the day the stock fell below the strong support level of $70.00 to a low of $69.71. However later in the afternoon it recovered to close at $70.22 which is just above support.

Over the next few days as market volatility increases on international stock markets, this level of support will be important for CBA to maintain.

Disclaimer: This post was for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.