ASX 200: The scramble for yield

By Colin Twiggs
February 18th, 2013 2:00 a.m. ET (6:00 pm AET)

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The ASX 200 broke short-term resistance at 5050 on the hourly chart before retreating to test its new support level. The index is advancing in layers of 25 points (5000 >> 5025 >> 5050 >> 5075) and shows no signs of abating. But retracement to test the new support level of 5000 remains likely in the larger time frames. Respect of support on the weekly chart would confirm a primary advance, with a long-term target of 6000*.

ASX 200

* Target calculation: 5000 + ( 5000 - 4000 ) = 6000

One area of concern: the advance is being driven by a scramble for yield, with blue chip stocks in the ASX 50 [$XFL] out-performing mid-caps [$XMD] by a wide margin — the exact opposite of what one would expect in a bull market.

Mid-caps [$XMD]

The situation is even worse when comparing to small-caps [$XSO].

Small-caps [$XSO]

Man is kind enough when he is not excited by religion.

~ Samuel Clemens