Trading Day

The S&P/ASX 200 slumped on the open, after absorbing the S&P downgrade over the weekend, then recovered somewhat but has now rolled over again after lunch. The market is down over 73 points or nearly 2% and stands at 4031 points.

Other Asian markets are experiencing similar sharp losses, with the Nikkei 225 down 1.3% at 9178 points, and the Hang Seng falling further, down 3.6% at 20174 points.

Other risk assets are having mild falls, with the AUD just below 1.04 against the USD. Gold has rallied strongly – probably on news the ECB will be buying EU member state bonds – and hit an all time record high of $1697 USD an ounce, but has come back a bit to $1695. WTI crude continues to fall, now down almost 3% to $84.40 USD per barrel.

Movers and Shakers
It’s still red across the board, with all sectors falling, although energy and IT sectors are off only slightly. The banks are down between 1 and almost 2% although CBA is barely down, possibly on anticipation of results later this week. Macquarie (MQG) was actually up in early trade but has since slipped 0.5%.

The resource twins BHP and RIO are again the main suspects in pushing the index into deep negative territory, down 2.6% each. Cochlear (COH) and CSL – are down 1.5% and 2.5% respectively, although management must be welcoming the continued weakness in the AUD.

Today’s Chart
I’m reverting back to a daily chart because it might give some hope. Even though the market went down 2%, there is a slim possibility of a “surprise” rebound in the days to follow. The long tail on today’s candle is usually the precursor to a stabilisation, or an arrest at least in large price falls.

Daily candle chart of ASX200 - with 260 day moving average (grey line)

Looking toward the weekly chart, note that prices are now at the post-GFC support level of 4100 points (I contend the lower level was an oversold condition and that this level represents the real “bottom” of the GFC, at least for now)

Weekly chart of ASX200 - note support and resistance lines

The Australian market will be going through some high volatility in the month ahead because of the full year earnings season (Australian companies only report twice a year), which will add to the overall market bipolar behaviour.

Local earnings season continues – today Bendigo and Adelaide Bank (BEN) and JB Hi-Fi (JBH) are reporting. Remember to bookmark the overall update here.

Comments

  1. ASX200 just dipped into the memorable ‘threes’ (3990 as I write) and Hongkers obviously didn’t read the ‘nothing to worry about’ memo (-4.04%).

    Suncorp dipped below $6.50 (Is that the same firm that was $8.50 in may?) 😉

    • Also, the long tail on today’s candle that “is usually the precursor to a stabilisation, or an arrest at least in large price falls” has disappeared at the close.

      • Yeah – it was a bit rude of the candle to do that. I’m hoping it’s better behaved tomorrow – but I’m not holding my breath.

  2. I showed bullish and bearish scenarios for the ASX 200 on my blog post last night, but you can scrap the bullish ones now, and I doubt I’ll be able to find any other bullish scenarios, no matter how I twist and turn the trend lines.
    There will be rallies, some fierce, but I think it is very likely that the market is headed in coming months to test the 2009 low.
    Also, looks very likely now that the AUD/USD is headed back below parity in coming weeks. Once again, with that market also I tried to find a bullish scenario, but the only one I could find has now been shattered. So, down we go, I believe.
    I’m looking forward to updating the charts tonight. Believe it or not, I don’t even get a glimpse of the charts during the day, although I do see price quotes, and respond to those, according to the plan I develop each morning.

  3. My AUDJPY short is sailing away (high correlation to equities and I can’t be @rsed shorting XJO or SPI anymore) 🙂

    “Red sails in the sunset, way out on the sea.
    Oh, carry the bull’s money home safely to me
    She sailed at the dawning, all day its been poo.
    Red sails in the sunset, I’m trusting in you.”

    (apologies to the memory of Nat King Cole)