Australian Equities Broaden Range of Winners

• Interest in Australian equities continues to broaden out.
• Consumer discretionary has performed better recently.
• It appears that some of the real estate sector is strengthening.
• With Chinese stimulus, perhaps traders are betting that Australia will benefit.

While the ASX 200 has been bullish overall, what has been perhaps overlooked is the fact that the rally in Australia is starting to broaden its reach. At this point, it’s not just about a handful of stocks, it seems to be that we have a very mixed picture, as corporations are having to perform in order to be rewarded. Previously, there had been some “knock on effect” from big players into other equities in the same sector that they were found in.

GMG

Goodman Group, a real estate REIT in Australia, has seen quite a bit of support over the last couple of days, as it hangs around the AU$35 level, and perhaps more importantly for technical traders, the 50-Day EMA. Furthermore, Goodman has been very bullish for the last several months, and after a recent bit of consolidation, it looks like the market is trying to turn things around and reach higher. The AU$36 level seems to be insight and breaking that level could open up the possibility of a return to the recent swing high.

WES

Wesfarmers Ltd has seen quite a bit of strength over the last couple of months, but recently had been consolidating. The market is now hanging around the AU$71 level and consolidating after the most recent leg higher. In fact, this leg higher ended up forming a bit of a “W pattern”, which could be a sign of continuation to the upside. As Wesfarmers is driven by a lot of consumer discretionary spending, this could represent a sign that perhaps traders are becoming more bullish on the Australian consumer. At this point, it remains a very bullish market from a technical analysis standpoint, and each dip could end up being bought into by value hunters.

CBA

Commonwealth Bank of Australia has been very bullish over the last several months, and on Monday ended up breaking out to a fresh, new high. As we threaten the AU$135 level, that doesn’t seem to be much in the way of concern in this market as it continues to perform. That being said, it does have an earnings statement coming out relatively soon, so to expect a little bit of volatility. Nonetheless, buyers continue to jump into this market each time it offers a little bit of value.

BHP

On the other end of the spectrum is BHP. Perhaps it is due to questionable commodity pricing, or just simply due to the fact that the markets have broadened out and equities investors are looking for returns and other places, but at the end of the day BHP has struggled quite drastically over the last couple of months. It has not exactly broken down significantly, but it did spend a little bit of time below the AU$42 level, an area that previously had been massive support. It is because of this that traders will be looking to see if this is a bottoming process, or perhaps BHP gets punished even further.

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