{"id":52713,"date":"2014-06-12T22:04:11","date_gmt":"2014-06-13T02:04:11","guid":{"rendered":"http:\/\/countingpips.com\/?p=52713"},"modified":"2014-06-12T22:04:11","modified_gmt":"2014-06-13T02:04:11","slug":"will-the-asx-200-hit-7000-points-next-year","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/06\/will-the-asx-200-hit-7000-points-next-year\/","title":{"rendered":"Will the ASX 200 Hit 7,000 points Next Year?"},"content":{"rendered":"
June 12, 2014<\/div>
\r\n<\/div><\/div>

By MoneyMorning.com.au<\/u><\/a><\/p>\n

The S&P\/ASX 200<\/strong> is Australia’s premier share market index. It’s widely followed and represents Australia’s top 200 stocks by market capitalisation.<\/p>\n

Since the index bottomed after the financial meltdown of 2008\/09, it’s now up a staggering 73%. This is nothing compared to the US S&P 500 ­­— the most followed index in the world — which is up over 188% since its bear market low in March 2009.<\/p>\n

You may think, surely the market can’t go up forever. Let’s face it: a lot of mainstream commentators and analysts have been calling for an end to this bull market for some time.<\/p>\n

This begs the question, where is the market going next?<\/p>\n

On this I’m with Kris Sayce. The Australian stock market<\/strong><\/a> is extremely bullish technically at the moment.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Let me show you what I mean. The chart below tracks the S&P\/ASX 200; each bar represents one week:<\/p>\n

<\/a>
\nSource: IG Markets, Diggers & Drillers<\/strong>
\nClick to enlarge<\/a><\/em><\/div>\n

The chart above shows that the market is going through a staged rally, shown by the black line. This is a technically bullish pattern for the ASX 200.<\/p>\n

I’ll explain this further.<\/p>\n

There have been three share market<\/a> rallies over the past 18 months. The first rally, between November 2012 and March 2013, re-rated the market from 4,400 points to 5,146 points.<\/p>\n

This was an exceptionally strong rally for a major index, returning 17% in less than four months. Before the rally, the market was very cheap on a price to earnings valuations multiple. In this case, the rally took share valuations back to a historically normal level.<\/p>\n

Considering the strength of this rally, the market became sceptical and sold off much of the gain. This defined the first significant resistance level of 5,146 points. <\/p>\n

As a result of this sell off, the market defined a lower high during 2013. This is very bullish, and means that the selloff low point of roughly 4,600 points was above the November 2012 low of 4,400 points.<\/p>\n

The market entered into the second stage of the rally as confidence came back around June 2013. The market rallied hard through the 5,146 resistance point, causing a triple high. This means that the market hit the 5,146 psychological resistance level three times.<\/p>\n

A triple high is technically bullish.<\/p>\n

After the triple high, more money poured into the stock market, causing a second significant resistance level of 5,351 points.<\/p>\n

Since this time, the market has gone up with no real momentum.<\/p>\n

This is great, but what does this all mean?<\/p>\n

It means that the stock market<\/a> hasn’t gone up in a straight line. The bull market rally has been slow, methodical and enduring. There is no ‘euphoria’ in the stock market like you typically see during the last phase of a bull market.<\/p>\n

Now we are at another significant resistance level of around 5,514 points. I show this with the light blue line.<\/p>\n

If the market can break through this psychological point, it’s likely to go higher.<\/p>\n

Saying this, the market could see a short term 10% correction. I wouldn’t be surprised to see a mini-correction before the next stage of the bull market begins.<\/p>\n

So, is Kris on track with his ASX 7,000 call for next year?<\/p>\n

My analysis suggests that he is.<\/p>\n

Jason Stevenson+<\/a>
\n Resources Analyst, Money Morning<\/em><\/strong><\/p>\n

From the Port Phillip Publishing Library<\/em><\/strong> <\/p>\n

Special Report: The ‘new steel’ that could revolutionise the auto industry, and how you can profit<\/a><\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au The S&P\/ASX 200 is Australia’s premier share market index. It’s widely followed and represents Australia’s top 200 stocks by market capitalisation. Since the index bottomed after the financial meltdown of 2008\/09, it’s now up a staggering 73%. This is nothing compared to the US S&P 500 ­­— the most followed index in the world […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-52713","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/52713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=52713"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/52713\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=52713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=52713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=52713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}