Australian share market report - 13 March 2019

Australian share market report

Australian Share Market Report - 13-March-2019

Is this the second top in a much larger Double Top?

The highest level the Aussie market has reached since the top (6851.5) before the GFC was made on the 30th August, 2018 at a level of 6373.5. Since this time we have sold off very strongly dropping 963.3 points or 15.1% all the way down to Christmas Eve or the next 116 days. So much for Santa Claus coming to town last year!

Maybe he was just waylaid as from the low of 5410.2 on the 24th December, 2018 the Aussie market had turned up quite strongly rallying all the way back up to 6270.9 back on the 7th March, 2019. This is a gain of 860.7 points or 15.9% in only 73 days or 2 and a half months. Given that the long term average gain from the Aussie market is 7.0% over the whole year we had more than doubled this and did it in less than a quarter of the time. Some could say we had run too far to quickly and that we were overbought in the short term.

More impressive than this is the lack of a down move or countertrend pullback as there is only 2 times where we have managed to string together 2 back to back Down days over this time. In comparison when we look at the move down there were 7 times where we had a sting of at least 2 Up days back to back.

This move up has retraced 89.3% of the move down so really only 10% shy of making it all the way back up, which is something we could still do? This could be just a small countertrend pullback before we test the August top if not move higher still. This is the Bullish scenario. We want to buy in after the market has found support (I have a number of different levels in the chart to keep an eye on) and is moving up again.

The Bearish scenario is that the recent top (7th March) could in fact be a larger and more important top and potentially the second top in a much larger Double Top reversal pattern with the top back in August. From this March top we have the second of the 2 Down days back to back which was followed by an Up day (yesterday) which reversed all the way back down to close below the open and at the low of the day indicating sellers were well and truly in control. Today (13th March) we have a Down day which not only confirms yesterday as a lower top but has also confirmed that we are trending down (lower highs and lower lows) on the daily chart. We have also have what is looking like a reversal on the weekly chart, at this time.  

Adding to this we have not only broken but managed to close what is looking like 4 consecutive days below the uptrend line that has been holding this rally up in place. This is not a touch or a kiss as I like to refer to it as when just touched but is looking more like a more significant break. With significant breaks generally come stronger and larger moves like what we saw when the down trend line was broken above starting this rally.

This is only early days but I believe it’s important to keep an eye on how things are progressing as this could be an important change in the market and may be something you can take advantage of either way it sets up.

Australian Share Market (XJO)

Australian Share Market (XJO) Daily Chart – last 6127.3, Tuesday 13-Mar-19

Australian Share Market Report 13 March 2019

*prices for the 13th are intraday prices before the close*

The very large Double Top pattern won’t be confirmed until its trading below the Dec bottom of 5410.2 and if it manages to do that then it sets up a target of, are you sitting down, 4498.2. There is a lot of water under the bridge until we see these levels but it pays to have an idea where the market may be moving to if you want to be on the right side of it at the right time.


Share Market Technical Analysis


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About Shane Langham

+61 (7) 3338 3838 Email Profile

Shane has passionately followed the markets since the age of 16, and has been an adviser in the financial markets since the year 2000 having worked for a range of firms, including one of the world’s largest investment banks as well as smaller boutique broking firms. Shane is also a past Vice President of the Australian Technical Analysts Association (ATAA) Brisbane, a position he held for 6 years.

Shane is currently a Senior Private Wealth Adviser at Phillip Capital and can assist you with all of your stock market needs - whether you are looking to buy or sell shares, set up a portfolio, grow your SMSF, protect your portfolio, or trade the market. He specialises in technical analysis, risk management, and options trading and focuses predominantly on the Aussie markets.

Shane also writes two key market related technical analysis reports (including a free weekly Market Commentary Report), designed to give traders and investors the best chance possible to get the results they are after from the markets. To find out more about these reports please click here.

Shane lives on the sunny Gold Coast with his wife and two dogs. He loves chatting about the market with other like-minded people, so don’t be afraid to pick up the phone or send him an email.

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