Thinking about 6000

A risk on session for international markets led by Europe is likely to see a firm opening on our stock market this morning. This will have traders again thinking about the potential implications of a break above 6000 by the ASX 200.

Soft commodity markets and concerns about the implications for Australia of waning growth in China may contain any latent animal spirits in the local share market at least temporarily

China’s March trade data will be a key focus for markets. Investors will be keen to get a line on how China’s economy is faring now that the disruptive effect of the Lunar New Year is behind it. This creates a parallel with upcoming US data where Fed interest policy will depend on how well the economy recovers from the impact of cold winter weather. Tomorrow’s read of March retail sales will provide some early insight into this.

For technical traders, the key will be not so much the 6000 resistance itself, but how decisively the ASX 200 index moves clear of this level if it is broken. The index has displayed volatile, oscillating behaviour in recent weeks. In this context a weak move above 6000 may have no particular significance at all but simply represent minor rally in a pattern that sees the market continue to drift around current levels.  On the other hand if buyers can mount a decisive move past 6000 in the days following its initial breach, a more positive outlook is in prospect.

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