ASX 200 Looking Healthy

The Australian Stock Exchange 200 index looks very healthy currently, as we have pulled back during the Thursday session to test the 50-day exponential moving average. The 5600-level underneath has been supportive, and as it stands, looks to be a bit of a “floor” in this market. The pullback has been gradual and subtle, and gives us an opportunity to pick up value at current levels. The Australian markets will of course react positively to the possibility of Asian growth, and of course construction.

It appears that all things Australian are doing well at the moment, and of course this looks to be a continuation of that. Recently we had tested the 5800 level, and pulled back from there, I believe that we will eventually reach towards that area but we may have a bit of choppiness on the way there. Every time we pull back, there should be value hunters out there looking for the opportunity to take advantage of what is a nice uptrend.

I have no interest in selling this market, at least not until we break below the 5500 level, which does not look very likely at the moment. If the Australian dollar exploded to the upside, that could put a bit of pressure on the stock market but as long as the gains in the currency are steady, that shows more healthy growth out of Australia, as it shows that commodities are gradually being bid up, and that generally means growth, not so much speculation.

Longer-term, I don’t see any reason why we won’t reach towards the 6000 handle, and possibly beyond. The market had formed a very hard bottom at the 5000 region, and now looks likely to head to that next psychologically significant number. For those of you that have the ability to trade the CFD market, this could be a nice longer-term trade.