Trading Day

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The S&P/ASX 200 Index closed down 2.6% or 106 points to 3964, after a worldwide “risk off” event coming after the US Federal Reserve announced its Operation “Twist” last night. In after hours future trading, the market is slipping whilst Euro and US futures point to similar losses.

Asian markets experienced similar moves, Japan’s Nikkei 225 closed down 2% to 8560 points, whilst the Hang Seng was heavily sold off and finished down 4.38% at 18005 points.

In other risk assets, the AUD was sold off and slumped to just above parity where it remains now at 1.0001 whilst WTI crude fell 2% to $84.20 USD per barrel.

Gold – the ultimate “undollar” asset – fell 1.9% to $1774 USD an ounce and is slipping before the London session having fallen as far as $1766.

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Movers and Shakers
A bath of blood across the board on the ASX, but strangely enough the IT sector gained 0.85% mainly because of Computershare (CPU) whilst materials and energy were the big killers.

The banks were hit hard, with ANZ down 2%, CBA also down 2.3%, NAB over 3% and WBC just on 2% – Macquarie (MQG) slumped 3.8% whilst volatile Cochlear (COH) lost almost 5% to just above $50 a share after recovering slightly yesterday.

The big losers were resources – BHP Billiton (BHP) slumped 4% to and is now at a 2 year low (July 2009 level) whilst its twin Rio Tinto (RIO) lost 6.5% to close at $65 a share.

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A slew of smaller resource companies took similar hits as commodity prices came off the boil – and fast. Maybe all that was holding up commodities was the supply of money, not demand?

Fosters (FGL) accepted the SAB Miller bid (finally) and jumped 7.7%.

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The Charts
Well here we are – under 4000 points again. For mind, a little too fast, but the trend is in. The short term daily pattern has now penetrated the sideways price channel with support at 4000 gone and resistance at 4300 points far far away.

The next target is the 3750 region (formed by the lowest orange line), support from over 2 years ago. As most shareholders own the banks (houses) and BHP/RIO (holes), most of which are back to July-August 2009 levels, that’s no capital gain for over 2 years. Remember how I said dividends are important? As is timing.

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If the weekly price penetrates the 3750-3800 level – a high possibility given how far the commodity markets can fall from here – then 3100 points is the next support level.

ThePrinceMB