The S&P/ASX 200 Index (ASX: XJO) is going bananas today – there's no other word for it (well, polite enough to publish that is).
At the time of writing, the ASX 200 is up another 2.51% to 6,149 points – smashing through the 6,000-point mark once again after last week's dalliance.
ASX investors might now be wondering if this rally is getting a little overheated, especially if you consider the ASX 200 has added more than 12% in just the last month.
But one analyst is predicting this could just be the start of a new rally.
Dale Gillham, chief analyst of Wealth Within has just told the Australian Financial Review (AFR) that he expects the ASX 200 to continue to power ahead in the coming weeks.
The AFR quotes Mr Gillham as stating:
I expect the [Australian] market to continue to rise over the next few weeks into mid to late June, although there is a possibility it could continue to rise into July… There is some short-term resistance around 6200 points, however, I believe the market will most likely move through this to the next level of resistance at around 6600 points over the next two weeks.
This comes after markets around the world take off after their shellacking in March. The US Nasdaq index hit all-time highs overnight (yes, you read that right). Meanwhile, late last week the Dow Jones Industrial Average crashed through the 27,000 points mark for the first time since early March.
Back home on the ASX 200, we are now at levels we saw in early 2019 – and before that just prior to the global financial crisis back in 2007.
What's next for ASX 200 shares?
If Mr Gillham is right, we look set to enjoy a fantastic few weeks on the ASX boards. An ASX 200 at 6,600 points would represent a further upside of another 7.3% for ASX shares.
Whilst this is obviously good news for investors, I am starting to get worried that the ASX 200 is becoming even further detached from reality. Yes, the threats from the coronavirus pandemic seem to be receding. But the damage the economy will sustain is still vast – and the true extent of this damage is not completely clear right now.
The ASX 200 is pricing in a rapid recovery. I think the heights of the ASX 200 might be questioned down the road if nothing short of a flawless return to a pre-coronavirus level of economic activity takes place.
But for now, let's all enjoy the rampant bull market and keep our fingers crossed that I'm being too pessimistic!
