The All Ords (XAO) is Australia’s secondary index behind the ASX 200.
It was considered the barometer of the Australian Stock Market, but since the introduction and influence of the S&P, the All Ords has losts its its status as Australia’s “Premier” index.
Many stockbrokers (myself included) continue to use it as a benchmark and prefer it over the ASX 200 index.
Why do I prefer the All Ordinaries over the ASX 200?
The All Ords contains the top 500 stocks by market capitalisation on the Australian Securities Exchange (ASX). As it contains mid-cap shares, many consider it better representation of the Australian economy. Although the difference is small, I believe the All Ords is a more accurate gauge of the Australian stock market than the ASX 200.
The Intraday All Ords chart is interesting only from a traders perspective. The most important time is the close. Typically the close indicate the “mood” of the market going in to the next day’s trading. Often, it’s also correlated to the US Futures index. If the US markets indicate they will open lower, this is often indicated in the All Ords later in the day.
The 5 day chart is primarily used to find the end of week close. If the Friday close is higher than the preceding Monday’s, the overall sentiment can be considered bullish. It’s also used to analyse the market’s response to announcements made during the week.
The 3 Month All Ords chart is used by momentum traders. In my opinion, it’s probably the least useful of all the charts.
A 6 month chart starts becoming useful for investors. It gives an early warning to the long-term trend of the All Ordinaries. Personally, I like to use 6 month charts overlaid with Multiple Moving Averages (MMA’s) to determine the volatility of specific stocks.
On the stockbroking floor, this is probably the most common time frame, and with good reason. My default template uses the 12 month chart because it provides enough detail for short-term trading, and gives enough history to determine the stocks previous price movements and any long or medium term trends that may be in place.
The 5 year chart is only used by long-term investors. If you have an average hold time less than 2 years, I feel the 5 year chart is of little benefit other than to determine the long-term trends and potential support / resistance levels.