The S&P/ASX 200 Index closed up 1.9% or 77 points today in a strong session to 4149. In after hours trading, the market is steady whilst the Euro and US futures point to similar gains.
Asian markets experienced similar moves, with the Nikkei 225 up 2.25% to 8864 points, whilst the Hang Seng was up 1.8% at 19528 points.
In other risk assets, the AUD returned to above 1.03, whilst WTI crude fell slightly from an overnight rally to $89.39 USD per barrel.
Movers and Shakers
A green day across the board on the ASX, with energy and financial sectors the biggest gainers.
The banks were all bid up strongly, between 1.8% and 2.6% percent. Macquarie (MQG) put on almost 5% whilst Bluescope Steel (BSL) also rose just over 5%. Paperlink (PPX) was the biggest loser in the ASX200, down almost 10%
BHP Billiton (BHP) climbed 1.6% alongside Rio Tinto (RIO) and Woodside (WPL) which both jumped around 3%
The Charts
Commitment to get over the 4100 point level is now here in abundance – a big rally with the ASX200 closing above its 15 day moving average for the first time in 2 weeks. The short term daily pattern has reverted back to a sideways price channel with support at 4000 and resistance at 4300 points.
A breakout above resistance (which has been attempted twice as shown on the daily chart above) provides an initial short term (to October/mid November) target of 4500 points, the probability measured by a breakout of momentum from negative readings (lower indicator on the chart below):
18 month daily chart with 60 day moving average and momentum
I do not yet consider this market to be bullish in the long term, as all indicators, as well as the more important correlated market analysis (i.e of Europe and US markets) still point to a bearish sideways market at best.
Here is the monthly chart of the ASX200 and Morgan Stanley’s “4 stages of a bear market” analysis. Hands up that we are out of Stage 4?
