April 2014

April 25th 2014: Aussie stock markets: XJO and XAO make very bullish weekly close: the highest since mid 2008!

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. 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 actually pushed higher to close out the week well above this key S/R level of 5480:

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 had also not been breached by a weekly candle close since June 2008. The XJO though also made a very bullish weekly close here and ended well clear of the 5480 level:

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 XJO and XAO have now succeeded in making one weekly candle close above this major resistance and this is the highest close since mid 2008. This is a major achievement but one swallow does not a summer make. 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 given that these two indices have now made a weekly candle close above the 5480!