Risk sentiment is improving on the back of better data out of China and the BRICs generally. And now the Syrian crisis has taken a step back from the edge, stocks around the world have reacted positively.
But over recent months, with the Dow & S&P 500 making new all-time highs and the FTSE hitting its highest level in more than a decade, the ASX has languished, having retraced not much more than 50% of the fall from the pre-GFC highs.
But with the BRICs improving, is it time for the ASX 200 and the All Ords to break out?
The analysts at iquantsystems think with a little more impetus it just might be. Writing to clients this morning, Adam Maxey from iQuant said:
Market has broken out to yesterday’s upside target at 5244. In the short-term, prices above 5223 are overbought. A break of 5244 will clear all resistance and may see a further flash cash breakout. The May 2013 peak at 5260 will be in focus today. SP500 and AUDUSD have also broken out… Market has exceeded last week’s peak and we look for support to form.
But he warns that the market needs to see real money buyers enter the market.
RSI on the weekly remains elevated and volumes need to increase to support price action.
As the chart below shows, the market has failed so many times above 5000 since the GFC lows that investors are right to be wary. But the bottoms are getting shallower on each dip.
The question is whether this time will be any different.
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