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Status of Australian AORD-X Index (March 2020)

This post is also available in: French

Excerpt from: “Crystal Ball for Investing and Trading” Book.

Status of Australian AORD-X Index

The All Ordinaries Index is the benchmark for Australian Stock Exchange (ASX), which comprises over 300 stocks traded on ASX.

Figure 13.14 shows a monthly chart of ASX from 1992 to March 20, 2020.

Figure 13.14 – Charts courtesy of TC2000.com

The following points are worth highlighting:

  1. For ASX, the top of Grand Super Cycle degree wave 3 did not occur in 2000, rather in 2007. The relatively light correction of 2002 was rather due to a wave 4 at one degree lower.
  2. For the period from 1992 to 2007, the wave has taken a clear pattern of motive impulse.
  3. The global market crash of 2002 affected ASX only mildly.
  4. The all-time high occurred on November 1, 2007, with a record price of 6,873.20, which has been slightly surpassed at the beginning of 2020.
  5. The so-called financial crisis of 2008 brought the ASX down to 3,090.80 on March 10, 2009. It lost nearly 55% from its top. In other words, the crash of 3,783 points corrected 66% of gains of 5,724 points from Q4, 1987 to Q1, 2009. As a reminder, 66% is close to the Fibonacci ratio of 2 divided by 3 or 66.7%.
  6. The correction has taken the pattern of an A, B, and C zigzag. Its subwave A started on November 1, 2007 and its subwave B on March 10, 2009 to complete on February 12, 2020. In March 2020, its bearish subwave C, the equivalent of subwave E for DJ-30, is in progress.  It should break through the horizontal support line of 1987 of 1150 points downward, toward a target of some 650 in November of 2020.

Australia is a mine-producing country and exports, among others, to China. Its resilience to crashes of 2002 was most likely due to its massive mining exports. Exporting countries are going to suffer quite strongly from the on-going depression and deflation.

The Australian economy has a GDP growth rate of 2.5% for 2015, a debt to GDP ratio of 34%, and an unemployment rate of 5.8%.

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