ASX 200 – 3848 the key level.

September 28, 2011

Australian Equities

I mentioned earlier this morning that the ASX 200 hadn’t gone anywhere for 5 or 6 years but I also mentioned that markets on Monday had bounced off important level. What I negated to mention in this morning’s piece, which an email from an old friend Shane alerted me to, was that the ASX 200 had also reversed within proximity of a very important level itself. 

 

As you can see in the chart the ASX 200 (click for a better view) since the low in 2009 has been constrained below 5000. The actual high looks like it was in April 2010 at 5025.10 on the 15th. This was important resistance as the 4987.90 level represents the 50% retracement of the fall from 2007 to 2009 as you can see in the chart below. So on that long a time frame the fact the ASX 200 keeps halting at or around 5000 tells us this is a big key level.

 

It also tells us that structurally, or technically, at best its in a sideways market but probably a secular bear market.

So for me the 3848 region is the key for the near term outlook for the Australian Equity market. Just trading below there is not enough to call it a break because it fell below but rebounded strongly last month. A close below however would be decisive however and open up an increased chance of a full retracement to the 2009 low at 3120.

I don’t need to add that a market that took the ASX 200 back to the 2009 low would be signally something terrible has happened or the global economy has gone awry. I’m hopeful the former doesn’t happen but fearful the latter will. For the moment though this is the level to watch and respect.

Please remember these are not recommendations for you to trade these are my views and I have my risk management tools and risk parameters that you do not have access to. Thus, this blog is for information only and does not constitute advice. Neither Greg McKenna nor Lighthouse Securities has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.

If you do need economic, investment or financial advice we are happy to help.

Please Email the team at Lighthouse at info@lighthousesecurities.com.au or Greg directly on greg@lighthousesecurities.com.au

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  1. Watercooler talk: Tale of 2 economies – USA and Australia :: Verity Business Solutions Pty Ltd - September 28, 2011

    […] Subscription, SaaS, and Perpetual Business ModelsWhats Making News on Wednesday 6 April 2011ASX 200 – 3848 the key level. (function() { var bsl=document.createElement('script'); […]

  2. BRICs – on the backburner but hotting up | Lighthouse Securities - September 30, 2011

    […] notice how similar that looks to the ASX 200 chart in the piece I wrote the other day identifying the 3848 level as key. The big difference is the Shanghai market is currently sitting […]

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