By: Michael McCarthy, Chief Market Strategist, CMC Markets Australia Last week, the weak price action of top stocks following good reports had me nervous about the outlook for the Australia 200 index . In a classic “in your face move”, the index is now more than 100 points higher. However, this brings the index closer to the key 6,000 level, which keeps it at the top of my watch list for market action. Why is 6,000 important? Frankly, I’m not a fan of the “psychological level” idea that some point to when markets are approaching “big figures” such as 6,000. One other reason many forecasters are pointing to this level is that it played an important part in the rise to the record high in November 2007, and the devastation that followed as the Great Financial Crisis unfolded: Australia 200 Index – 2007 / 2008 Source: CMC Markets Now, as the index approaches this area, the MACD has crossed, well above the zero line: Source: CMC Markets Given the strength of the rise, and the clear up trend in place, traders may be wary of using the MACD as a standalone indicator. Potential support tests appear in place near 5,850 then 5,780. Despite this attack of MACD induced nervousness, it’s difficult to identify the possible fundamental drivers of a significant sell off. Local factors remain modestly positive, as company reporting on balance has been slightly better than expectations, and interest rate markets continue to price in further rate cuts. If we were to see a bearish trigger, it may come from offshore.