Australian stocks are in great shape. The Australian Securities Exchange Index (ASX) has risen 30 pct year to date. It is among the top performers in the world. Is the Australian stocks forecast for 2019 still bullish? Or is this a major top, and is the ASX a sell? In revising our Australian stocks forecast 2019 we conclude that the Australian market is moving to bullish momentum. This may last a few weeks or even months. It will probably result in one push higher in high beta stocks before a temporary top is set. This is one more bullish 2019 market forecast.
Interestingly, even the Australians were not convinced their stock market would do well.
Experts Thought Australian Stocks Market Outlook to be ‘Bumpy’
In this article on one of the major Australian financial outlets it appears that experts were predicting a volatile year.
“The Australian economy is the biggest risk at this point,” Ms Liu said. “Consumer spending is weak, the housing market has fallen sharply, and there’s a big flow-on impact across the construction and consumer sectors.” She believes several foreign markets will outperform the ASX 200 this year.
By drilling down to the ‘root causes’ we see that experts are thinking of a bumpy year. Experts forecast Australian stocks in 2019 to be volatile, certainly not top performers, because of the following reasons:
Experts forecast a bumpy ride for the ASX amidst the ongoing uncertainty of Brexit, concern about interest rates rising too quickly in the United States and an expected slowdown in global economic growth.
Here is becomes very interesting. Experts believe that Australian stocks are correlated to global stock markets.
Australian Stocks Forecast 2019: Intermarket dynamics
If the above correlation between Australian stocks and global stock markets is true we believe Australian stocks will do well in 2019.
The leading indicators for global stocks, primarily the Euro and 20-year Yields in the U.S., are supportive of higher stock market prices in 2019.
This would imply that our Australian stock forecast for 2019 would be bullish. A temporary top may result in some selling at a certain point. But overall, ongoing momentum may last longer than just a few weeks. We expect momentum to continue for a couple of months into the summer of 2019.
The current global trends are supportive of higher stock prices. This should support Australian stocks to rise as well, over the long term, in 2019 and 2020.
High beta stocks in Australia
Consequently, our Australian stock forecast for 2019 is supportive of one major push in high beta stocks in Australia.
This includes volatile sectors like commodities and technology. Think of small cap stocks as well.
Note that we wrote recently about Australian nano cap stock Mobilicom: Tiny But Promising Drones & Robotics Tech Stock
Moreover, another hot sector in Australia is commodities.
According to this outlook for the Australian stock market it appears that battery demand, and the commodity demand required for them, is likely to remain hot. Australia has several companies developing and exploring for lithium, cobalt and other battery-related commodities. These companies are seeing investment from further upstream, being the battery manufacturers as they look to lock in supply.
Note that we have a very promising nano cap blockchain stock in our top blockchain stock list. It has a great outlook. If momentum in the Australian stock market continues we expect this blockchain stock to outperform in the year(s) ahead.
Australian Stocks Forecast 2019: The Charts
In a typical top down fashion we look at the Australian stock market chart: the ASX index monthly and daily timeframes.
The monthly timeframe of the ASX shows this steady rise that started in 2016.
The market has moved from support to resistance and back several times. It is almost THE perfect uptrend.
Note that a bullish breakout above the 2008 highs took place last year, and was confirmed in the first week of 2019. This is a bullish sign. It suggests the uptrend is not over. It also contradicts what experts were saying in the article mentioned above.
The daily timeframe confirms the monthly. That’s a good thing.
It provides some more color and detail on top of the monthly. Essentially now real new insight can be derived from the monthly other than the fact that the ASX is close to resistance.
We believe test of resistance may last for a several weeks to a few months. That’s because of the strong momentum that is building up. This favors one last push in small cap and high beta stocks in Australia before a retracement and consolidation takes place.
The charts favor a continuation of the long term uptrend later in 2019!
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