Trading Day

The S&P/ASX 200 jumped on the open on overnight rallies in the US and Europe and is up 56 points or 1.35% at 4197 points.

Other Asian markets are experiencing a mix of gains, with the Nikkei 225 up 0.17% at 8997 points, and the Hang Seng up 1.5% at 19896 points.

Other risk assets are mixed, with the AUD slightly up against the USD, now at $1.0325, WTI crude slipping after a strong rally overnight, now at $85.11 USD per barrel.

Gold is down again, now trading at $1762 USD an ounce.

Movers and Shakers
It’s green across the board, except for Bluescope (BSL) down 5%, with healthcare and IT sectors leading the way. The banks are all up, but only posting very modest gains, with WBC the leader up 0.6%.

The resource twins BHP and RIO are now pushing up the index, and are up 1.6% and 2.1% respectively.

Daily Chart
The daily chart shows how this rebound rally has continued into its fourth day, retracing almost 10%. This is not unusual in the context of market crashes, as I should earlier this week, rallies during bear markets can exceed 20% and are common.

Daily chart of ASX200

What must be kept in context is the overall trend – there is substantial overhead resistance at 4500 points, which must now be reckoned as the mid-point in the 2 year plus (instead of 4700 points) sideways/bear market.

Monthly chart of ASX200 - back to the sideways groove?

Local earnings season slows down today with no large companies reporting, but Bluescope Steel (BSL) has updated the market, noting a small loss is likely, and $900 million in writedowns.

Remember to bookmark the overall update here.

Comments

  1. Going by the intraday chart Avid, no-one it seems. The ASX200 is now only up 27 points.

    A close like this shows a lot of weakness in the weekly chart (which is more important for showing the medium term trend).

  2. After hours quotes currently have the ASX 200 down to 4108.

    S&P 500 looks to be rolling over downwards from the trend line on the chart I posted this morning.

    • Interesting. ASX is looking to form a short-term upward trend – lower lows and higher highs…

      I am a little concerned that the wider response to the crash in the mainstream press is one of Australian Exceptionalism and domestic complacency.

      We know that Australia is different – buying after the last GFC made you a motza, and the economy didn’t go to hell afterall. This week’s rally here but not so much in the US just provided confirmation of this belief.

      I’m a little concerned that if this rally breaks through resistance, things could very quickly get ecstatic. I’m thinking a fast hard rally back up, retest the highs (perhaps even break through) before the real shtf. I can see worrying parallels with exactly this time four years ago…

      Thoughts anyone?

      • Anything’s possible. Sorry I can’t be more helpful than that! But given how bearish things have seemed this week, that’s quite a bullish thing to say. I certainly wouldn’t rule out the AUD/USD testing its recent high, though I’ll be stunned if the ASX 200 gets anywhere near its 2011 high for many many moons. Needless to say, I’ve been stunned before.

        You can scrap everything I wrote in my previous post, of just 2 hours ago. ASX 200 after hours is currently 4192, and there are short-term bullish trend line breaks all over the shop, though whether they’ll have legs, nobody knows…

        http://www.avidchartist.com/2011/08/yet-more-updated-hourly-charts-for-asx.html

      • I am long ASX200 up to around 4500. The ASX has been falling faster than other markets recently. On Tuesday it touched 3800 when the GFC bottom was abut 3100 if I am not mistaken. The risk/reward is on the upside IMO. Especially on a 2-3 years time frame. In the meantime dividends are not too bad. The AUD has weakened a bit, which should provide better profits for exporters. Rates do not look like they need to go up anymore, which is also good for the market. Ben is still pushing commodities prices with his US$ dollar devaluing. Obviously we could go back down to test the GFC lows too. Volatility is very high. But I reckon the EU are kick-the-can professionals anyway and they’ll do anything to stop the drop (see short banning) cheers

        • On banning shorts:
          “Here’s a bit of history that isn’t encouraging.

          On 18 September 2008, the UK regulator, the Financial Services Authority, introduced a temporary ban on the short-selling of bank and financial shares. Within days, Bradford & Bingley collapsed and was nationalised, and that was followed in mid-October by the taxpayer rescues of Royal Bank of Scotland and HBOS/Lloyds.

          Few would argue that the eurozone’s banks are as weak as many international banks were in 2007-8. But precedent suggests a short-selling ban does not change the fundamentals.”

          from:http://www.bbc.co.uk/news/business-14502291

          • You might be right. Seems to be working so far, but it’s early to say.

            By the way US retail sales in July are up, highest since March. And guess what: July is when oil prices started dropping.

            Ben: stop inflating commodity prices and valutations with your useless monetary “innovations” and the economy will slowly recover by itself.