ASX200 keeps on keeping on

The statement that accompanied the board meeting offered little in the way of new insights around monetary policy or guidance and maintained a dovish slant. However, it did include a cautionary note on the Australian housing market and lending standards.

The property market has continuing to surge in recent weeks, exemplified by a Sydney house that sold for $1.72m in November, selling again on the weekend for $2.74m. A gain of more than $1m in 5 months. The link to the article from Domain.com is posted here.

This type of activity will ensure the RBA minutes are closely scrutinized for discussions around the housing market and stability risks. As well as possible indications as to what might trigger a policy response. Keeping in mind the RBA’s forward guidance is not an iron-clad guarantee and could change, should the data justify it.

Despite this concern, the ASX200 has wasted little time today building on its 1% gain of last week and its 8.4% gain year to date, to be trading at fresh 13 month highs near 7080.

The most recent leg of the rally has been aided by support returning for stocks that have benefitted from the stabilisation in interest rates in April, including IT and gold stocks. As well as the big miners after a third straight week of gains for iron ore, taking it towards a decade high.

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As viewed on the chart below, following the break above the February 6938 high, the ASX200 is now closing in on trend channel resistance, currently near 7100/20 and above here resides the all-time high of 7197.2.

While there is a temptation to expect an immediate pullback from either of these two important resistance zones, the last two weeks of April are renowned as one of the strongest two-week periods of the year, before the seasonally weak month of May.

Hence the preference is to allow the uptrend to continue into the end of April, using 6950/30 as the bullish assessment level. Much below 6950/30 would suggest a deeper pullback towards 6750/30 is underway.

Source Tradingview. The figures stated areas of the 19th of April 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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