The S&P/ASX 200 fell again today, down 66 points or 1.6% to 4075 points. In after hours trading, the market is up slightly to 4100 points waiting (dreading?) the European market open and a probably gap down when the US re-opens after the long weekend.
Asian markets experienced similar losses, with the Nikkei 225 losing 2.2% to 8590 points whilst the Hang Seng closed down 1.6% to 19297 points.
In other risk assets, the AUD lost 0.3% against the USD, now at 1.052, whilst WTI crude dropped nearly 4% to $83.50 USD per barrel. Gold has climbed above its record high and is now at $1922 USD an ounce.
Movers and Shakers
It’s deep red across the board on the ASX, although there were some winners. For the rest its bad news with the energy and IT sectors hit the hardest.
The banks had heavy losses in the morning but came back in the afternoon as the RBA held fire on interest rates. ANZ and CBA are down 0.7% and 0.8%, whilst NAB and WBC did worse, losing 2.7% and 2.4% respectively.
Macquarie (MQG) took another slug, down 3.7%, now at its October 2008 low:
BHP Billiton (BHP) and RIO dragged the market down as well, off 2.2% and 1.4%.
The Charts
Today I’m going to go through a fractal series of charts to give an indication of where the market is heading.
First, the monthly chart, with the 90 week CCI indicator, which measures overbought and oversold regions.
Monthly chart of ASX200
Note that the last five months have seen an accelerated downtrend (the red candles), which is now below the May 2010 Greek Crisis lows. This is a faster move, but not of the same magnitude as the 2007-08 crash, which was “Titanic” (i.e it just went on and on…)
From this analysis, it is obvious that the ASX200 is in a bear market, a condition in which rallies can eventuate, but are unlikely to be lasting, although one maybe beginning soon…
ASX200 weekly chart
On the weekly chart, a rare bullish pattern is emerging – a broadening bottom. For this to succeed, the market must close above 4250 points by the end of the week. However, as I explained in my Chart of the Day post this morning, the likelihood of this breakout is low, as all equity markets are heavily correlated.
ASX200 daily chart
However, I prefer the daily chart as the support/resistance lines are easier to evaluate (and fade). The market closed today just on recent support below 4100 points, but its not far to the crash low of 4000 points from here. Bullish investors need to look for a sideway channel pattern between 4100 and 4300 points to eventuate before considering positions, similar to the pre-QE2 action of last year. And hope.