Trading Day

The S&P/ASX 200 Index had a stonking day, closing up 109 points or 2.55% higher to 4281 points after positive leads from overnight markets. In after hours trading, the index is up 8 points, although Euro and US markets are pointing to slightly lower or mixed opens.

Asian markets experienced similar gains, with Japan’s Nikkei 225 up 1.75% at 8640 points, the Hang Seng almost 4% up to 19963. The Shanghai Composite lagged and is currently up 16 points or some 0.6% to 2524 points.

In other risk assets, the AUD fell slightly – probably on RBA forecasts – back below 1.04 after a good night whilst WTI crude rose slightly, now at $94.33 USD a barrel.

Gold was steady during the Asian session and is currently at $1764 USD an ounce after a cracking run last night or $1694 AUD an ounce.

Movers and Shakers
Unicorns and rainbows on the ASX today, with all sectors up, the usual suspects – materials, energy and financials – leading the way.

The banks were bid up strongly, with ANZ up 2.6%, Commonwealth (CBA) up 2.1%, National Australia Bank (NAB) also up 2.1% and Westpac (WBC) up 2% even.

Macquarie (MQG) did better, up 3.6%, whilst healthcare stalwart Cochlear (COH) continues to fall, now below $53 a share. Its “twin” CSL gained 1.8% whilst Telstra (TLS) was bid up almost two percent.

BHP Billiton (BHP) lead the broad gains today, up nearly 4%, whilst Rio Tinto (RIO) put on over 5%, gold miner Newcrest Mining (NCM) had another good day, rising 3.6%

Fortescue (FMG) finished the day up nearly 8% and Woodside Petroleum (WPL) was up 1.3%

I asked yesterday if Woolworths (WOW) is bottoming, after gaining 2% it put on another 1.6% today – note, The Prince Super Fund bought some for a long term dividend investment.

The Charts
Yesterday I suggested that the short term bullish case is reinforced by a bounce off support and the deceleration in the falling prices since the false breakout above the medium term downtrend line. Today’s action lifts the closing support line into a short term uptrend with a probable intermediate uptrend if the market clears resistance at 4300 points in the next few days.

A break below the green uptrend, which doubles as short term support, would likely complete a very short term head and shoulder pattern (the false breakout being the head) resulting in the resumption of the medium term downtrend.

As seen on the weekly chart below, the market still needs to clear this overhead resistance and then the long term average at ca. 4450 for a sustained rally.

Watch my “Chart of the Day” posts for continued analysis of US, Euro and Asian markets which will lead the way.

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  1. stonking! i like it, nice way to end an otherwise pretty odinary volumeless week. looks like “buy the dips” is here though. for now anyway. just whats needed to turn this from a bear market rally into the foothils of a new bull market.

    what ever the case, bear market rally or bull market (ifavour the latter)it looks like its got plenty more gas left in the tank.

  2. prince interested in your thoughts on WOW. think we have discussed before regarding the flawed hardware strategy as housing bubble clearly now bursting. whats your thoughts on EPS growth next few years and also how soon can they offload dick cheese, if they can only get 175 million will share price fall a few more percent over next 6 months based on writedown on dick cheese. i too have been buying for weeks, havent bought any since 2001 and have been buying since the IPO!!!

  3. Well looking at the Bond Markets they are not buying the peaches and cream rallies at all, with yields on Italian 10 year debt at record highs for example. Something is definitely wrong.

    Also, viewing a wide basket of charts in the ASX 300, I was struck at how little conviction there was generally amongst these mid-sized stocks, with lots of sold off gaps and weak volume breakouts yesterday.

    This is not how new bull markets start off I imagine – on hype and hope, so my opinion is that this is still very much a bear market we’re in. But in case I’m wrong, I am holding some long-dated out of the money call options over the Index.

    • “I was struck at how little conviction there was generally amongst these mid-sized stocks”

      good observation M4 and is why you dont even bother in that part of the market yet. in the early stages you just trade the crap out of the large caps becuase they go first and it keeps your risk low. as they rise i.e. offer less value you move down the food chain. still way too much value in large caps down here to bother messing around in midcaps yet.

        • early stages of doubling my money velociraptor!

          remember back in september when the market was 3900 and i told you to “get long” oversold industrials and financials?????? you said the only thing to get long was in OOTM puts! Bwahahahahah! hows your 100% losses going on those?

          LMAO? yes i am, all the way to the bank!

    • sorry forgot to add:

      “This is not how new bull markets start off I imagine”

      couldnt be more wrong M4. this is exactly how bull markets sart off, all in the large caps first.

        • im calling the market higher still as i have been for the past 2 months and have given countless reason why. you dont listen anyway you just ridicule, despite the fact ive been right and you have been wrong.

          if the first thing you look at when planning equity startegy is second rate indicaters like the AUD its not suprising you cant understand why the market keeps going up.

          i havent got my software package open but i doubt the correlation you speak of is that great anyway.

          heres a tip. try looking at valutions, dividend yeilds, balance sheets, earnings and relative valuations to other asset classes rather than exchange rates.

          • Market keeps going up because the US Fed won’t stop killing the dollar, in a futile attempt to blow another asset bubble, to replace the other two that popped. Momo traders are hoping to get back to square by gunning everything in sight, seeing that the last 11 years have seen diddly-squat in the way of returns.

            There, can we now just trade the stupid thing and not bring our prejudices into it? Who as traders have not been long at the top, or short at the bottom? Who cares, so long as you keep yourself alive long enough to take advantage of a trend, when it comes by.