ASX 200 confirms breakout

The ASX 200 closed above its 2015 high of 6000, confirming an earlier breakout by the All Ords. The immediate target for an advance is 6250 (5950 + 300) but the long-term target is the 2007 high of 6800.

ASX 200

I remain wary of the banks, with the ASX 300 Banks index facing resistance at 8800. Reversal below the medium-term trendline at 8600 would warn of another test of primary support (8000). Recovery above 8800 is as likely. I remain concerned over their low capital base and high mortgage exposure.

ASX 300 Banks

Miners are more bullish despite the falling iron ore price. The ASX 300 Metals & Mining index reached its target of 3500 but is now retracing to test the new support level. Respect would signal another advance.

ASX 300 Metals and Mining

Australia seems headed for a period of political instability, while tighter Chinese monetary policy and a crackdown on capital outflows could also impact on the Australian economy. There is a lot that could go wrong but the market is taking this in its stride. Just temper your optimism with a measure of caution.

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