Market focus January 18, 2013. New Year Optimism continues.

By Kenneth Robson on January 19, 2013 • ( 1 )

China Insurance Building (中国保险大厦), Shanghai (Photo credit: thewamphyri)

New Year Optimism continues

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.