ASX-200: better late than never?

August 14, 2017

The Aussie stock market has under-performed most other global stock markets since the 2008/9 global recession but I’m wondering if it’s about to push higher in a seemingly gravity-defying action to correct this divergence in a better late than never move.

A number of global stock indices have recovered since the 2008/9 GFC (Global Financial Crisis) and have even gone on to carve out new all time HIGHs. Indices that have achieved this include the S&P500, DJIA, NASDAQ, NASDAQ-100, Russell-2000, DAX (German), FTSE (London) and TSX (Canada), albeit some of these indices are more extended than others.

The Australian stock market though, with the ASX-200 (XJO) as one metric here, has defied this trend. The ASX-200 pulled back with the GFC, like all the major stock indices, however the recovery has been more tepid and there have not been any new Highs printed here with the index still trading below levels seen before the GFC. Might that be about to change though and could this divergence be about to correct? I’m seeing a bullish Cup ‘n’ Handle forming up on the ASX-200 and so I’m keenly watching the ‘Handle’ trend lines for any new breakout.

S&P500 monthly: this index pulled back with the 2008/9 GFC but has since recovered to print new all-time HIGHs. A bullish ascending triangle breakout move has completed on this index. There might be better trading opportunities on other stock indices given this post GFC extension!

DJIA monthly: this index also pulled back with the 2008/9 GFC but has since recovered to print new all-time HIGHs. A bullish ascending triangle breakout move has completed on this index too. Here, too, there might be better trading opportunities on other stock indices given this post GFC extension!

NASDAQ composite monthly: similar here with the pullback and recovery to print new Highs but the move is not nearly as extended as with the S&P500 and DJIA. I have been stalking this index for the last few years and have given presentations on the NASDAQ and many of its listed stocks. A bullish ascending triangle breakout move is in progress here:

NASDAQ-100 monthly: ditto here.

Russell 200 monthly: US small caps:  this index pulled back with the 2008/9 GFC but has since recovered to print new all-time HIGHs. A bullish ascending triangle breakout move has completed on this index as well.

DAX (German) monthly: this index pulled back with the 2008/9 GFC but has also since recovered to print new all-time HIGHs. A bullish ascending triangle breakout move has completed on this index as well.

FTSE (London) monthly: this index pulled back with the 2008/9 GFC and has recovered to print new all-time HIGHs although this breakout is not as extended as with some other indices. A bullish ascending triangle breakout move is in progress here.

TSX (Canada) monthly:  this index pulled back with the 2008/9 GFC and has recovered to print new all-time HIGHs although a tend line resistance breakout is yet to trigger here:

ASX-200: The situation is rather different with the Australian stock market though. The XJO, which is an index listing the top 200 Aussie stocks, also pulled back with the 2008/9 GFC but it has yet to recover to either match or beat the previous Highs.

I currently see a bullish pattern brewing on this index though in the form of a Cup ‘n’ Handle pattern and I’m watching the ‘Handle’, currently about 19 weeks in duration, for any new breakout. I consider there is plenty of catch-up that needs doing here and I’m looking for any bullish breakout to achieve this for the XJO.

ASX-200 monthly: XJO: this this index pulled back with the 2008/9 GFC but has not managed to recover to print any new HIGH. Note the Cup ‘n’ Handle pattern:

ASX-200 weekly: XJO: watch the ‘Handle’ trend lines for any new breakout. 

ASX-200 4hr: XJO: the daily 200-EMA continues to be support here for the time being:

Summary: The Australian stock market has under performed many other of the global stock markets but the time might be coming for some correction with this divergence. Watch the XJOs monthly chart bear trend line and Cup ‘n’ Handle trend lines for any new breakout effort.