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Good morning CVELU, Australian markets continue to look healthy this week, with momentum remaining positive across the broader market and commodity-related sectors.
The XJO has now experienced a healthy pullback following its recent strong run. The key support area sits between 8,950 and 9,100, where buyers could begin to step back in. Holding this region would keep the broader uptrend intact.
Materials remain one of the strongest areas of the market. After turning bullish at the beginning of August, the sector has risen by double digits and has now broken higher on the weekly chart. This is an encouraging technical signal and suggests the rally may have further to run.
Healthcare has also performed strongly, rising around 45% from its June lows. However, after such a rapid move, the sector is beginning to look stretched in the short term. Some profit-taking would be normal, although the longer-term trend remains positive.
Energy also continues to show strength. The key level to watch is 12,000. A sustained break above this level would be a significant development and could signal the beginning of a much larger long-term bull market for the sector.
Nickel and uranium remain two key commodity markets to watch. Nickel responded positively around major support at 16,700 last week, with buyers stepping in. Uranium also attracted buyers and continues to show an improving technical picture.
Iron ore is a new area to watch closely this week. The recent sharp fall has taken the commodity into major support and is showing signs of a possible exhaustion gap, which can occur near the end of a decline. A break back above $96 would provide an early sign that momentum may be turning higher. Fortescue (FMG) will be one Australian stock to watch if iron ore strengthens.
Gold and silver also remain technically healthy, while the Emerging Companies Index is showing strong momentum, potentially helped by smaller mining companies beginning to rally.
Overall, the Australian market remains constructive, with commodities, resources and energy continuing to provide much of the strength.
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