The XJO ended the week on 4771.2, a solid 61.7 points higher. The high for the week was 4787.2 just short of the 4800 hurdle. Market recovery is now about half way between the 61.8% Fibonacci level, and the last high at 5000. At present momentum the XJO could well challenge this resistance target within the next 2 months.
Bullish market sentiment continues to emerge:
- European and US debt levels excite less concern
- There has been strong growth in US home sales and prices, and new house constructions
- The China economy is strengthening with GDP growth to 7.9% better than expected and growth in retail sales
- Boral and Bluescope Steel announced operational reconstructions to improve their profitability to market approval.
- Even RIO’s $14 billion write-down was greeted here in Australia with a 2.7% lift in the stock-price
- Australian retail sales in December were up 15.2% on a year ago
- Low cash, fixed interest and bond rates of around 3% are motivating investors to shift funds into equity markets
- Buyers have bidden prices higher, whilst some investors have reserves to take advantage of any retreat in market prices.
- Even the languishing share-price of US stock Facebook after a disastrous float at US$40 last year in which the price fell to US$17.73, is up 19% this year to US$29.66 (Yahoo)
Outlook for next week
The market trend higher seems so strong it is hard to see it faltering. However with RSI and MACD in overbought territory, a corrective pull-back may be just around the corner.
- Weekly Aussie Market Focus, Dec 7 (technicality.me)
Categories: Trading opinion