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.
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.
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.
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.