ASX set for fall as US tech stocks drag markets

It will not be a good day on the ASX today if the overnight moves in US markets are any indication, according to Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

Yesterday's 40 odd point rally is likely to be swiftly wiped away if SPI traders are correct in knocking 1%, 60 points, from yesterday afternoon’s close. "What’s dangerous about that is it means the SPI is indicating a test to/of 5,770 which for me is the key to a deeper fall of maybe another 100 points or more on the ASX200 index," he added.

What’s particularly troubling though is that while Australia and other markets have already touched their February lows US markets have not. Certainly, the S&P pulled up last Friday at the 200-day moving average from where it bounced last month. But that’s not the low of 2,530 that the S&P is likely biased toward. That means further weakness is possible for the local market. And of course, behaviourally this dead cat bounce will scare a few of the buyers back into their box.

McKenna added: "Looking at the SPI chart then I see it is off its low but that ominously the low for the past 3 days has been in the 5,742/44 region. That’s critical now. If it breaks then 5,600/10 comes back into the frame with 5,700/10 and then 5,652 as support on the way down."

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