Wednesday, April 23, 2014

Aussie stock markets: XJO and XAO

Aussie stock markets: XJO and XAO
Aussie stocks have been making impressive gains recently. Two key Aussie stock indices, the XJO (ASX Top 200) and XAO (All Ordinaries Index: 500 largest cap stocks), are showing that Aussie stocks are trying to continue their recovery by pushing up over a key resistance level and into relatively new territory. 

XAO: All Ordinaries:
This index is based on the 500 largest cap stocks on the Aussie market and it has been trying to push up through the 5428/5430 level for the last 6 months. The reason that this level is such a significant one is that this is the 61.8% fib pull back level of the 2007-2009 bear move from the GFC. The index made a few weekly closes above this level in February and March and has succeeded again now this April. 

The 5480 level, just above the 61.8% fib, has been recent resistance for these bullish moves though and this level needs to be watched as the index keeps marching up towards this zone again. A weekly close above the 5480 level would be quite a bullish signal as stocks have not closed above this level since June 2008! A bullish close above the 5480 level would suggest that that the 78.6% fib level, up at the 6,000 region, might be the next target. Price has pushed up over this key 5480 level in today's trade but the weekly close on Thursday will be the significant candle to watch :

XAO daily:

XAO weekly

XJO: ASX 200: 
This index reflects the top 200 Aussie stocks and has been trading fairly similarly to that of the XAO. The 61.8% fib level has been recently breached and the same 5480 level is key to watch here. This level has also not been breached by a weekly candle close since June 2008:

XJO daily:
XJO weekly:

The Australian stock market has lagged the broader USA S&P500 in its recovery from the GFC. The two key Australian market indices of the XAO and XJO are only now trying to push up through the 61.8% fib pull back level. The S&P500 has already made a 100 % pull back from this bear market move and..... then quite a bit more!

S&P500 monthly

The 'Sell in May and go away' mantra may yet hold true for stocks but the Aussie market seems to be having none of that just at the moment. I'd be wary of shorting the Aussie market in the hope of any sell off though if these two indices do make any weekly candle close above the 5480 in the coming weeks!

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