Australia 200 for Wednesday, October 1, 2014
For all of September the Australia 200 Index has declined strongly from its multi-year high after running into resistance around 5650 back to enter its previously established trading range between 5400 and 5500, before falling further below 5250. A couple of weeks ago the 5400 level was called upon to offer support as the index desperately tried to stay in touch with its range, however it fell through there before rallying strongly back up to 5400 early last week. It has now fallen sharply to a seven month low below 5250 and it hopes to stay in touch with the well established range between 5400 and 5500. Up until recently, the 5400 level had done well and propped up price to keep it within the range. For most of this year when the index has fallen to the 5400 level, it has bottomed out at around 5370 so it will be interesting to see whether this happens again now. All of this was preceded by a solid move higher bouncing strongly off the support level at 5400. Just prior to the surge it fell sharply over a couple of weeks returning back to more familiar territory between the 5400 and 5500 levels.
In its recent fall at the beginning of August it moved down to a three week low around 5375, however it received solid support at the 5400 level which has allowed to consolidate and rally higher. The solid move higher throughout July saw it move strongly up through both the 5500 and 5550 levels to reach a then six year high around 5620. In recent weeks it has discovered a new key level to deal with after running into a short term resistance level at 5550, which earlier last week provided some solid support. It reversed strongly several weeks ago bringing it back down to almost touch the 5400 level before rallying back higher again. At the beginning of June the Australian 200 Index fell and broke back down through the key 5500 level towards a four week low around 5400 before consolidating and resting on support there for an extended period.
The 5400 and 5500 levels have firmly established themselves as significant and any substantial break to either side will most likely be a significant move and be closely monitored. It is quite likely many are sitting on the sidelines waiting for the break before committing as they continue to watch the index move between these two levels. Back at the end of May, it moved back and forth between the two key levels of 5500 and 5550 before the recent fall. Over the last couple of months the Australia 200 Index has formed an amazing attraction to the key 5500 level as it spent a considerable amount of time trading around it. A couple of weeks ago, the index fell away heavily back down to support around 5400 before returning to the key 5500 level just as quickly, as if gravity had pulled it back. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.
Australian consumer confidence is stabilizing as households become more optimistic about their finances. The ANZ/Roy Morgan weekly consumer confidence index rose 0.7 per cent in the week ending September 28. The index has stabilised around its long-run average in the past two months after a sharp decline around the time of the federal budget in May. ANZ chief economist Warren Hogan is confident that consumer spending will improve in the coming months now that people are feeling more confident. “The trajectory of consumer confidence remains key for the recovery in consumer spending, which in turn will be supported by gains in household wealth on the one hand but constrained by subdued household income growth on the other hand,” he said. While consumers are more satisfied about their own situation, there is still nervousness about the economy. The index that measures expectations about economic conditions for the coming year and the next five years fell one per cent and 6.3 per cent respectively last week.
Australia 200 October 1 at 00:15 GMT 5252 H: 5290 L: 5245
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5250 | — | — | 5500 | 5650 | — |
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will be trying to rally higher after falling sharply to below 5250. For most of this year the Australia 200 Index has moved well from the lower support level at 5000 up to the multi-year highs above 5500 in the last month or so.
Further levels in both directions:
• Below: 5250.
• Above: 5500 and 5650.
Economic Releases
- 01:30 AU Retail trade (Aug)
- 05:00 JP Vehicle Sales (Sep)
- 08:00 EU Manufacturing PMI (Sep)
- 08:30 UK CIPS/Markit Manufacturing PMI (Sep)
- 12:15 US ADP Employment Survey (Sep)
- 13:45 US Manufacturing PMI (Sep)
- 14:00 US Construction Spending (Aug)
- 14:00 US ISM Manufacturing (Sep)
- 14:00 US Vehicle Sales (Sep)