Small Ords Technical View

The ASX200 put in a muted rally through July from 5400 but a mid August sell-off saw price action retrace deeply, all the way back to the ‘bull market’ support line. This trendline rises out of the important 2009 GFC market low of 3121. Its support of our market advance should not be underestimated, having captured mid and late 2011 as well as mid 2012 corrections. The index needs to hold here (4918), as the below chart emphasises. Despite my bullish prognosis for the Small Ordinaries (XSO) in our June quarterly note to investors, the benchmark was not spared in the recent market rout. That said, investors should note its relative performance vs the ASX100 has been impressive, outpacing it across monthly, quarter and CYTD time periods. The XSO looks technically sound and enjoying market support around the 1920/30 level.