The S&P/ASX 200 is down over 1.4% this afternoon, after digesting the slump in commodity prices and US/Euro markets overnight. Asian markets are all down, with the Nikkei down 0.8%, the Hang Seng almost 1% and Singapore just over 0.6%. The AUD has slumped to just above 1.06 against the USD, with a midday update of jobs figures sending it down, and 86.1 against the Yen (which is highly correlated with the ASX200)
Yesterday I suggested that current conditions suggest a “buy box” is building, similar to the November 2010 lows. That still holds, but one has to look at the weekly charts to get a better perspective.
The major trend and support line remains at 4700 points – a close below this area would be a clear sell/short zone. The weekly chart below shows how close the current price action is to this support area. Contrarian traders could buy here at the bottom of this channel and sell on a rebound to 5000 points.