ASX 200 Outlook for Week Ahead: Sideways, Down, or Up?

At time of writing the ASX 200 [XJO] is up marginally by .37%, sitting at just under 6,000 points, or 5,963.4.

This follows a sharp fall for the XJO, as markets opened it plunged and went as low as 5,881.

Three XJO charts for you…

There is a potential point of resistance at 6,000, dating back to 2015, marked out below:

ASX XJO - ASX 200 Shares

Source: tradingview.com

And you can see, there is an uptrend in its 20- and 50-day moving averages below on the weekly:

ASX XJO Share Price Chart - ASX 200 Shares

Source: tradingview.com

On the daily chart you can see it almost pushed past 6,200, registering the highest point of the coronavirus rally, 6,198.6.

Since then it has posted a small day in the green, then a three-day losing streak, a subsequent large green bar, and now some sideways trading:

ASX XJO Share Price Chart 3

Source: tradingview.com

Without getting too bogged down in charts though, there are some intriguing points to consider going forward for the XJO.

For instance, a lot of the enthusiasm around the travel sector appears to be evaporating in the face of a continued risk of lengthy border closures.

This includes companies like Qantas Airways Ltd [ASX:QAN], Flight Centre Travel Group Ltd [ASX:FLT], and Webjet Ltd [ASX:WEB].

All are down around 3–4% today, at time of writing.

Another risk to consider is how the big banks are going to deal with rising unemployment figures and bad debt.

With the XJO’s heavy weighting towards financials, this could be a concern.

A passive strategy might not be the best way forward, if say you think the Big Four are due for more pain.

Outlook for ASX

The US-China trade war could ramp up, there could be a second wave of the virus, and after a strong rally from the March low, investors may look to take some money off the table.

All are downside risks in the current environment.

That being said, after four small bars on the daily, it is possible this week may finish largely flat.

Weekly consumer sentiment data is due out on Tuesday, which may move retail and e-commerce stocks.

Followed by that, you have ABS job vacancy data to be released on Thursday, 25 June.

There will also be a flurry of US data throughout the week including GDP data for the March quarter to be released on Thursday.

This could swing the XJO in Friday’s session depending on which way it goes.

Regards,

 

Lachlann Tierney,
For Money Morning

PS: ‘The Coronavirus Portfolio’: The two-pronged plan to designed to help you deal with the financial implications of COVID-19. Download your free report here now.


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:


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