ASX 50 Index Archives - the patient investor

May 22, 2013

ASX 200 & All Ords selling pressure

The ASX 200 is testing medium-term support at 5150. Breakout would indicate a correction to 4900. Reversal of 21-day Twiggs Money Flow below zero — and the longer-term bearish divergence — warn of selling pressure.
ASX 200 Index

* Target calculation: 5150 + ( 5150 – 4900 ) = 5400

The All Ordinaries weekly chart displays a longer-term bearish divergence on 13-week Twiggs Money Flow. Expect a test of the rising trendline at 4900.
ASX All Ordinaries Index
The Large Cap ASX 50 rising faster than the ASX Small Ords confirms this is not a typical bull market. There is a high degree of risk aversion and sentiment of retail (mom+pop) investors is more accurately captured by the Small Caps index which represents the ASX 300 excluding ASX 100 stocks.
ASX 50 Index

May 16, 2013

ASX 200 selling pressure builds as Aussie Dollar falls

The ASX 200 broke resistance at 5200, but bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure.
ASX 200 Index

The daily chart also shows a bearish divergence, suggesting a test of support at 5100/5120. Failure would indicate a correction, while respect would confirm an advance to 5400*.
ASX 200 Index

* Target calculation: 5150 + ( 5150 – 4900 ) = 5400

Bipolar behavior of the market is highlighted by comparison of the ASX 50 Large Caps to the ASX Small Ords (ASX 300 – ASX 100). Small Caps tend to outperform Large Caps during a bull market, as can be seen from 2003 to 2007. But the current “bull market” gives out mixed signals, with Large Caps powering ahead while Small Caps remain in a down-trend. Demand for Large Caps seems to have been inflated by international capital flows.
ASX 50 Index
And the falling Aussie Dollar, with a target of $0.96* against the greenback, is likely to lead to retreat of the ASX 50 and ASX 200 indices.

* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96

April 15, 2013

ASX 200: Correction continues

The ASX 200 opened sharply lower following a steep fall on US markets overnight. Respect of resistance at the 5000 level confirms the correction signaled earlier. A 21-day Twiggs Money Flow peak below zero would warn of strong selling pressure.
ASX 200 Index

The ASX 50 monthly chart shows that even correction back to 4500 would not disrupt the primary up-trend and may present a buying opportunity for investors. Breach of support at 5000 would confirm the correction, but a trough above zero on 13-week Twiggs Money flow (and above 4500 on the index) would signal the primary trend is intact.
ASX 50 Index

March 14, 2013

ASX 200: Retracing in a strong up-trend

The ASX 200 is retracing for another test of support at 4980/5000. Breakout would warn of a correction, while recovery above 5100 would signal an advance to 5500*. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure.
ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4500 ) = 5500

A monthly chart of the ASX 50 [$XFL] puts the retracement into perspective. Rising 13-week Twiggs Money Flow indicates buying pressure. Respect of support at 5000 is likely, but even a stronger correction would not disrupt the primary up-trend: respect of 4500 would present a buying opportunity.

ASX 200 Index

March 12, 2013

ASX 200 advancing

The ASX 200 broke resistance at 5000 on the strength of strong buying pressure, signaled by rising 13-week Twiggs Money Flow. Retracement that respects the new support level would confirm an advance to 5500*.
ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4500 ) = 5500

On the daily chart, mild bearish divergence on 21-day Twiggs Money Flow warns of retracement to test the new support level at 5000. Reversal below 4980 is unlikely but would warn of a correction.
ASX 200 Index

ASX small-caps ($XSO – ASX Small Ords) continue to under-perform the ASX 50 [$XFL]. The opposite of what one would expect in a bull market: treat it as a caution. The current $XSO down-swing should test the lower channel at 2300, presenting a buy opportunity for swing traders.

ASX 200 Index

March 5, 2013

ASX 200: Large caps strong while small caps decline

The ASX 200 continues to test support at 4980/5000 on the weekly chart. Breakout above 5100 would offer a medium-term target of 5500*. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Reversal below 4980 is unlikely but would warn of a correction.
ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4500 ) = 5500

ASX small-caps are still doing badly, with the ASX 50 [$XFL] out-performing the $XSO (ASX Small Ords) by a substantial margin. The opposite of what one would expect in a bull market: treat it as a caution. The current $XSO down-swing should test the lower channel at 2300, presenting a buy opportunity for swing traders.

ASX 200 Index

February 25, 2013

ASX 200: Small caps warning

The ASX 200 is headed for another test of resistance at 5100 on the hourly chart. Breakout would signal continuation of the primary advance. Reversal below 5050, however, would indicate another test of 5000.
ASX 200 Index
The monthly chart shows strong momentum but retracement to test the new support level of 5000 is likely in the weekly (if not monthly) time frame. Respect of support on the weekly chart would confirm a primary advance with a long-term target of 6000*.

* Target calculation: 5000 + ( 5000 – 4000 ) = 6000

ASX small-caps are still doing badly, with the ASX 50 [$XFL] out-performing the $XSO by a substantial margin. That is the opposite of what one would expect in a bull market and should be treated as a warning to exercise caution.

ASX 200 Index

February 18, 2013

ASX 200: The scramble for yield

The ASX 200 broke short-term resistance at 5050 on the hourly chart before retreating to test its new support level. The index is advancing in layers of 25 points (5000 >> 5025 >> 5050 >> 5075) and shows no signs of abating. But retracement to test the new support level of 5000 remains likely in the larger time frames. Respect of support on the weekly chart would confirm a primary advance, with a long-term target of 6000*.

ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4000 ) = 6000

One area of concern: the advance is being driven by a scramble for yield, with blue chip stocks in the ASX 50 [$XFL] out-performing mid-caps [$XMD] by a wide margin — the exact opposite of what one would expect in a bull market.

ASX 200 Index

The situation is even worse when comparing to small-caps [$XSO].

ASX 200 Index