Australia 200 for Wednesday, November 19, 2014
Over the last week the he Australia 200 index has returned some of its recent gains falling from above 5550 down to a three week low around support at 5400. Prior to that it had enjoyed a solid resurgence throughout October after getting much needed support from the 5200 level, which has resulted in it moving back above the 5400 and 5500 levels, around a two month high. The 5400 level is now starting to provide the index some support as it is looking to consolidate. Throughout most of September the Australia 200 Index 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 5200 and to an eight month low around 5120 a few weeks ago. Several weeks ago it received solid support from the 5100 level which saw it rally well to close out a couple of weeks ago. Back in early September 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. Up until recently, the 5400 level had done well and propped up price to keep it within the range.
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.
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.
Reserve Bank of Australia governor Glenn Stevens has indicated interest rates are likely to stay low for years or until non-mining businesses have the courage to invest again. Australian companies were waiting for someone else to act and take risks to grow to provide evidence of demand, when it was up to them to act, Mr Stevens said. As mining investment and income growth falls and household debt and unemployment rises, he suggested there was little danger of the economy overheating to raise rates above the current 2.5 per cent level. “Inflation is well under control and is likely to remain so over the next couple of years,” Mr Stevens told a Committee for Economic Development of Australia dinner. “In such circumstances, monetary policy should be accommodative and, on present indications, is likely to be that way for some time yet.” It was not unusual that stronger growth and confidence was taking a while to rebound after the global financial crisis, but inevitably it would, he said. “With business capital spending, sometimes we find a few years later we look back and it actually was starting a bit earlier than we knew at the time,” Mr Stevens said. “We have to get to the stage where shareholders are not saying to the board ‘just keep giving us dividends and give us the capital back’. People are saying ‘what are you doing to invest our money for the future?’.”
Australia 200 November 18 at 22:10 GMT 5431 H: 5442 L: 5398
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5400 | 5100 | — | 5650 | — | — |
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will be trying to find some more support from the 5400 level and look to rally higher and return to above 5500 again. 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 5600 in September.
Further levels in both directions:
• Below: 5400 and 5100.
• Above: 5650.
Economic Releases
- 23:50 (Tue) JP Customs Cleared Trade (Oct)
- 00:00 AU Internet Skilled Vacancies (Oct)
- 04:30 JP All Industry activity index (Sep)
- 05:00 JP Leading indicator (Final) (Sep)
- 09:00 EU Current Account (sa) (Sep)
- 09:30 UK BoE MPC minutes released
- 13:30 US Building Permits (Oct)
- 13:30 US Housing Starts (Oct)
- 19:00 US Fed releases minutes from prior (Oct 28-29) FOMC meeting
- EU EBA Management Board Meeting
- EU ECB Governing Council hold non-rate setting meeting