The S&P/ASX 200 slumped on the open, but then strongly recovered as the unemployment figures were released but is still down 20 points of 0.5% from yesterday, at 4120 points.
Other Asian markets are experiencing ructions, with the Nikkei 225 down 1.2% at 8922 points, and the Hang Seng down 0.5% at 19687 points.
Other risk assets are mixed, with the AUD stabilising against the USD, now at $1.023
Gold is down after a mammoth run up overnight, now trading at $1788 USD an ounce. WTI crude has stabilised now at $82.69 USD per barrel.
Movers and Shakers
It’s mixed across the board, with only the telco sectors posting positive gains due to Telstra’s 4% move up, ironically on bad results. The banks are generally up, with ANZ up 1.5%, CBA up 0.2%, NAB up 0.3% and WBC up 0.8%. Macquarie continues to fall and is down 3.5% to an almost March 2009 low.
The resource twins BHP and RIO are not taking part in the gains, and are down 1.7% and 2.6% respectively.
Todays Charts
…most investors think that dipping to fair value for a minute and bouncing is normal. It is, in fact, highly aberrant historically. Markets staying down and washing away a whole generation’s false expectations, high animal spirits, and excessive risk-taking – that would be normal.
The quote from Jeremy Grantham> at GMO (see this morning’s post) is apt – are there any more bargain hunters out there to keep this rebound rally going?
Daily chart of ASX200 - lots of overhead resistance to get through
The market has rallied over 10% from its intraday low to today’s intraday high. This is not unusual and the rally could extend even further – remember yesterday how I pointed out that 20% rallies during bear market phases are quite common.
Weekly chart of ASX200 - resistance at 4500 (orange line)
Note on the weekly chart above there is significant resistance at 4500 points – a place where many went long expecting just a “normal” bounce and a place to buy at fair value. But what if fair value is a long, long way below?
Local earnings season continues – today its Alumina (AWC), Aquarius Platinum (AQP), Telstra (TLS) and and update from Singapore Telecom (SGT). Harvey Norman (HVN) and David Jones (DJS) also release sales updates for the last quarter.
Remember to bookmark the overall update here.