ASX 200 powers ahead while most Aussies on holidays, US & Europe stronger overnight, ASX futures up 66 points

While those in NSW, QLD, SA and the ACT were enjoying the Labour Day weekend, the remaining Australian states went to work and helped bid the ASX 200 to a bullish close of 5,150.53. It looks as though this performance will continue today with ASX futures up another 66 points overnight, giving us an indicative opening that puts us ahead of the key 5,200 level that, if held, could give the Australian stock market the ingredients for a rally out of this six-week funk that it has been wallowing in. You can see in today's first chart that the ASX 200 and its futures have not managed to hold levels above 5,200 for very long at all since the August sell-off, and we'll find out this week whether the major daily closing low put in on 29 September will act as a base for traders to place 'long' positions on top of. 

The biggest threat to an extension of this bounce from 29 September's 4,918 low to yesterday's 5,150 level will be from the US S&P 500 market. The S&P 500 has put in five consecutive gains to take it from 1,881.77 on 28 September to 1,987 last night. That's a 5.6% gain in a week and as you can see on the second chart today (S&P 500 cash index CFD), it is now coming up against selling resistance at 2,000 that it needs to break through and turn into buying support if it is to maintain the current rally and help the ASX push higher than 5,200 as a result. I can't be sure what themes the Aussie market will focus on today, but if I were taking big index positions, I'd be waiting for confirmation that the S&P 500 was looking like settling its next day session above 2,000 points before continuing to take out bullish positions.

Broadly, the buying behaviour that we're seeing in equities at the moment is looking like a return to confidence from the August shock, and this is illustrated by today's last chart, showing S&P 500 implied volatility (VIX), which has fallen back to its lowest point since the sell-off took place six/seven weeks ago. It's early days, but there are some promising signs emerging for investors and we're certainly feeling good about last Thursday's Rivkin Local Blue Chip strategy release - don't forget to email if you're interested in buying 10 high-yield stocks but don't have a Rivkin Local membership.

Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via or by phoning +612 8302 3600.

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This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

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