The ASX 200 may be attempting to carve out a short-term base just as December seasonality begins to turn more supportive. While the index has lagged Wall Street and Europe in recent weeks, technical signals suggest downside momentum may be easing.
SPI 200 futures tracked Wall Street higher overnight, raising the prospect of a late-year Santa rally for Australian equities. Within the index, Coles stands out as a potential upside candidate after rebounding from key long-term support.
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ASX 200 Outlook: Seasonality Turns Supportive as Coles Finds Support
ASX 200 Market Snapshot
- The ASX 200 cash index hinted at a potential swing low on Thursday, forming a high-volume, narrow-range bullish pin bar after Wednesday’s bullish hammer.
- SPI 200 futures tracked Wall Street higher overnight, potentially setting the stage for a Santa rally to begin today or early next week in the Australian share market.
- Nine of the 11 ASX 200 sectors remain lower month-to-date, led by Industrials (XNJ) and Information Technology (XIJ), while Materials (XMJ) and Financials (XFJ) are the two sector leaders.
- While the ASX 200 has underperformed Wall Street and the DAX recently, December seasonality tends to favour stronger bullish returns, supported by the historical Santa rally pattern.
Chart analysis by Matt Simpson - source: ASX, LSEG
ASX 200 Seasonality for December
While this has been mentioned previously, it is worth restating for those unfamiliar. The ASX 200 has a strong seasonal bias toward gains in December, particularly from around 17 December onward.
Over the past 25 years, the ASX 200 has posted a positive December close 64% of the time, with an average return of 1.4% and a median gain of 2%. The bulk of these gains tend to occur in the second half of the month, with both average returns and win rates improving notably between 17 and 29 December. New Year’s Eve, by contrast, has delivered negative returns around 75% of the time.
Chart analysis by Matt Simpson - Source: TradingView, ASX SPI 200 Index Futures
Coles (COL) Outlook: Bullish Signals from 200-Day MA
For several weeks I have favoured Woolworths (WOW) over rival Coles (COL) for the bull camp, but with WOW’s rally stalling below its 200-day SMA, it may be time for a rethink — particularly as COL is now flashing bullish signals above its own 200-day SMA.
The weekly chart shows COL on track to form a small bullish candle at the August high near 21.40. An established uptrend remains intact, while a bullish RSI (2) divergence has formed in oversold territory.
On the daily chart, COL bounced from the 200-day SMA on Wednesday and the 200-day EMA on Thursday, with volumes rising and running above average.
My bias remains bullish above the double-bottom low near 21.38, with a break above 22 now anticipated. Bulls can keep an open upside target — and hope Santa delivers a late-year rally.
Chart analysis by Matt Simpson - source: ASX, LSEG
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-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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