Inside the market

Market averages pausing

The All Ordinaries index was up 0.25% for the week ending 22 March 2019. The index ended the week 2.6% above its 200 DMA, having tracked sideways for most of the week and finishing near mid-bar, but below the short term high of two weeks ago. 6,325 remains the point of resistance, and we still expect to see the index spending some time moving sideways around this level in a new trading range before showing its hand as to the timing and direction of the next move.

Of the 493 stocks currently comprising the index (and for which we collect data), 273 of these (55%) ended the week above their respective 100 DMAs, down from 59% of names at the end of last week.  Two hundred thirty-two stocks were up for the week, while 261 ended the week flat or down. Two hundred and twenty-nine shares finished the week within 20% of their 52-week highs, with 73 of those within 5% of 52-week highs.

While the index itself was marginally up for the week, more stocks ended the week down than up. If the current level is to be a point of resistance, we would expect some near term weakness as the market establishes a new trading range in order to digest the steady gains experienced since the December 24 low.

We would like to believe that the current pause is just that, a pause on the way to new highs. However, it’s impossible to predict whether this is the case. All we can do is continue to be guided by the trend signals generated by the individual stocks that make up the market as well as the market average as a whole.

By Danny Sandler

Founder of Ocean Asset Management.