Reason I brought to your attention this ASX downturn is due to 2 observations
1. The ASX disconnect with the Dow as I mentioned in yesterday’s post; and
2. The beginning of MACD downturn noticeably across indices including ASX200, Materials, Info Tech and Small Ordinaries and most of these indices have either breached 20day MA or on the cusp of it. The last time this happened was in Mid March and the market pulled back.
Could well be tax loss selling in motion and if that is the case coupled with a deterioration in positive momentum, we could see a poorer June outing.
Market darling A2M is also under pressure this week and the hurt BIG holders are facing with administration of Big Review TV may have also affected market sentiment and led to reduced market exposure.
People should exercise caution buying into perceived positive announcements especially in the microcap space as sp rise may be momentary and unable to sustain.
I still hold to the view that second half 18 and 2019 would be challenging times for the market and this is consisent with my posts in this thread since February.
Selective stocks may continue to do well but i doubt these would include stocks with charts that have moved considerably south since Feb18.
Conventional wisdom is buying stocks that have been well beaten on the basis that it is cheap. But there is a reason why the sp of the stock had fallen so much- most of it is due to irrational exuberance from the boom we had especially in the tech space during the second half of 2017. Check the market cap of the stock and not where its current sp in the chart because many of these microcap stocks have had CR and issued additional stocks to increase their share base.
