The ASX is at levels not seen since before the Global Financial Crisis – it’s a solid performance, but at just around 70% of its pre-GFC highs it’s a performance that lags behind the US and other markets.
Even with this more subdued performance when compared to its global peers there are many, myself included, who worry that these levels are unsustainable.
Not so according to Oliver Gordon of Rivkin Securities, who told Business Insider that when viewed through the prism of market breadth this rally looked strong.
Gordon said that the “general rule is that if a high proportion of the 200 stocks are themselves moving higher, then the rally is likely to be sustained.”
He noted that when looking at the advance/decline line which “plots the cumulative number of stocks closing higher on the day, minus the number of stocks closing lower on the day” he saw signs of strength.
“What’s encouraging for local investors at present is …that the current advance in the ASX200 is broad-based and thus more likely to be sustained”.