For technical-analysis veteran Jason McIntosh, the most interesting thing the ASX 200 did this week was not selling off. The Australian benchmark absorbed another RBA rate hike, held its ground above key Fibonacci support, and closed higher — and the Motion Trader founder argued that is a quietly bullish signal investors should not dismiss as noise.
McIntosh laid out the case in his weekly ASX strategy session published Friday, framing the price action against a wider backdrop of S&P 500 records, a Nasdaq that has not been this stretched above its 50-day moving average in 20 years, and persistent retail scepticism about the rally.
"The ASX 200 has rallied this week despite a rate hike. So is that a sign of the market starting to turn higher?" McIntosh said. "Signs of buying have started to emerge over the past week, and it's been happening during a week that's included a rate hike. While I think that the rate hike was largely expected, it would have typically still been fuel for a bearish market. And when a market doesn't sell off on bad news, it's often a sign the underlying tone is positive."
McIntosh stopped well short of calling a breakout. He continues to read the local benchmark as range-bound between support around the August lows and resistance up near 2,100 on the equal-weight index, with the 50-day and 100-day moving averages flattening in a way that signals an absence of sustained momentum either way.
The shape of the recent pullback, however, kept his bias to the upside. Using a Fibonacci retracement off the March low, McIntosh noted that the index pulled back into — and held — the standard Fibonacci zone rather than retracing the entire rally.
"When a market rallies strongly, it pulls back, holds on to its gains, that's a sign that the dip is being bought," he said. "The concern would have been if this selling that we started to see a couple of weeks ago had persisted and then eroded the entire gain. That's a real concern when that happens, and that's a sign the rally is being sold. That's not happening here."
"I'm not sure the market is quite yet ready for new highs," he said of materials. "I think this consolidation might just take longer to play out before the trend can potentially resume. But the key point here is that materials remain supportive for the ASX 200."
He flagged the equal-weight version of the ASX 200 as the constraint. Sitting roughly 10% below its January peak and trading below declining moving averages, the equal-weight index, in McIntosh's reading, is still repairing technical damage from the late-January-to-March correction. That, he argued, is probably a marker that the headline ASX 200 also needs more time inside its range.
Across the Pacific, McIntosh used his airtime to push back on what he called the most common reasons given for fading the US rally — that it is overvalued and that it is narrowly led by big tech.
"This type of strength, the type of strength that we've seen, it's generally more enduring than many people expect," he said. "We've seen this many times before. People say the market's overvalued, but the underlying trend is strong. The market tends to surprise the sceptics over time."
To rebut the narrowness argument, McIntosh pointed to the S&P 400 mid-cap index, which has hit fresh all-time highs alongside the headline benchmark. "If the recent strength was just big tech and AI, then I'd expect that to show up in mid-cap performance," he said. "Mid-cap isn't as strong as the Nasdaq. It is a little bit behind the S&P 500, but nonetheless, it's making new all-time highs. So that suggests to me that there is quite a bit of buying across the market. It's not narrow. It's not just in a few big tech names."
The note of caution came on the Nasdaq, which is currently trading around 10% above its 50-day moving average — a stretch McIntosh said is the most extreme in two decades. He was at pains to head off the obvious interpretation.
"The first thing many people think when they hear something like that is, 'Oh, the most stretched in 20 years, that means the market's about to crash.' No, that's not where I'm going with this," McIntosh said. "Most of the time it's a signal of underlying bullish conditions, and that typically leads to higher levels in the coming months. But it also often leads to at least a brief near-term pause."
His operational takeaway for ASX investors was patience rather than action. McIntosh said he plans to keep holding stocks within broad upward trends rather than trim into a sideways index, on the view that the right setups can perform even while the headline benchmark grinds inside its range.
