While it could be argued that the ASX200’s 10% rally in November was an early Christmas present/rally, it merely enabled the ASX200 to finish the year near to where it started. A relief to those who sat tight during a 40% plunge during the first quarter. But lacking in comparison to the recovery in other global equity markets.
The start of 2021 has started on a brighter note. The Sydney COVID-19 clusters that emerged before Christmas have been bought under control. The Democrat's win in the Georgia Senate runoff bought with it a promise of even more stimulus as well as a plan to enact a massive wave of infrastructure spending, possibly in the order of $2-$3trillion.
Reinforcing the idea that the incoming Biden administration is prepared to splash the cash, testimony overnight from nominee Treasury Secretary Janet Yellen. Yellen urged lawmakers to “act big” on their next relief package and that the benefits of this would far outweigh the negatives associated with a higher debt burden.
A combination of factors, expected to provide continued support for equities, helping the local bourse, the ASX200 pop above the top of a 6-week range earlier today.
From a technical perspective, the break above 6765, if confirmed on a closing basis would open the way for the ASX200 to push towards the next upside target coming in at 6900/7000. Above here, the next upside target is the pre-COVID-19 high of 7197.
After trimming an overweight long position at the end of last year, a core long position in the ASX200 was retained, which we are determined to stay with. Dips back into a band of support 6600/6500 will be looked at closely as a buying opportunity to add to core longs.
Learn more about trading indicesSource Tradingview. The figures stated areas of the 20th of January 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