The S&P/ASX 200 Index closed up 93 points or 2.2% today to 4162 points following gains on “undollar” or non-USD risk markets around the world. In after hours trading, the index is up slightly, with Euro and US markets also pointing to strong opens.
Asian markets experienced similar moves, with Japan’s Nikkei 225 up 1.25% at 8628 points, whilst the Hang Seng rose over 3.5% to 17778 points.
In other risk assets, the AUD is currently trading at 97.77 cents USD, whilst WTI crude was steady after rallying overnight, and is at $82.60 USD a barrel.
Gold was up during the Asian session, currently at $1660 USD an ounce or $1696 AUD an ounce.
Movers and Shakers
Another bright shiny green board on the ASX, with almost all sectors up, the biggest winners financials, energy and materials (as always it seems) and telco/IT sectors down.
All of the banks were up strongly, with ANZ up 3.3%, Commonwealth (CBA) underperforming “only” up 1.9%, NAB up nearly 4% and WBC up 2.5%. Macquarie (MQG) was bid up strongly again, rising another 6% for the day.
Cochlear (COH) slipped to close below $49 as investors await the October 18th AGM (and hedge their bets on other blue chips), whilst CSL put on 1.2%.
BHP Billiton (BHP) had another good day – up 2.5% and Rio Tinto (RIO) was up nearly 5% again – up some 12% this week after hitting its 2 year low, whilst Newcrest Mining (NCM) went up 2% and Fortescue (FMG) up nearly 8%
The Charts
The unreal undollar rally continues – what is pushing this market up? Unicorns and rainbows? QE from the BOE? I would say an absence of bad news and a realisation that a 20% correction MUST BE a brilliant bonanza for bargain basement buys for the bulls.
Weekly chart of ASX200 - 1000 point drop....
What do we need to see for a continuation? As I said yesterday:
First, the ASX200 follows Europe and US so watch for their leads. Next, the local market needs a weekly price close (a daily peek above is not enough) above the medium term moving average at the congestion area at 4100 points.
Ding and ding. But there are 2 clouds on the horizon. First, the crucial US jobs market figures tonight, then:
Further support of the rally will come when very strong resistance at 4300 points is breached and therefore the road is clear to the long term moving average at around 4400-4500 points.
Daily chart - note next resistance level at 4300 points
I consider this a high risk rally and not an entry point for investors of any timeframe except a period of weeks and months.
There are substantial technical risks here, let alone fundamental (quick reminder – Europe is still in the woods without a paddle, US political deadlock is tighter than a Scotsman at a bar).