Trading Day

The S&P/ASX 200 Index closed up 20 points or 0.48% higher to 4293 points today. In after hours trading, the index has given back on these gains and is down 20 points, with Euro and US markets are pointing to slightly lower or steady opens.

Asian markets had a mixed day, with Japan’s Nikkei 225 down 1.2% at 8663 points, the Hang Seng up 0.4% at 19753 and the Shanghai Composite currently steady at 2513 points.

In other risk assets, the AUD fell over half a percent to 1.0317 against the USD whilst WTI crude slipped slightly, now at $95.37 USD a barrel.

Gold was steady during the Asian session after rising strongly in the London/NYMEX session overnight and is currently at $1792 USD an ounce or $1737 AUD an ounce.

Movers and Shakers
A generally good day on the ASX, with most sectors up, only consumer stocks and IT sectors down.

The banks were all good, with ANZ up 1.8%, Commonwealth (CBA) up 0.7%, National Australia Bank (NAB) up 1% whilst Westpac (WBC) put on 0.8% after going ex-dividend yesterday.

Macquarie (MQG) slid nearly 0.4%, whilst healthcare stalwart Cochlear (COH) finally had an up day, closing at $52 a share after gaining over 0.5% today. Its “twin” CSL gained 0.8% whilst Telstra (TLS) was bid up slightly to $3.15 a share.

BHP Billiton (BHP) was steady, whilst Rio Tinto (RIO) put on 1.4%, gold miner Newcrest Mining (NCM) up 1%, Fortescue (FMG) having a quiet day, only up nearly 3% and Woodside Petroleum (WPL) up 0.3%

Woolworths (WOW) continues to bounce back from its 3 year low and put on another 0.5% to finish at $24.60 per share.

The Charts
Today’s action almost confirmed an intermediate uptrend, as the market peaked above the 4300 resistance level (4301.5 was the intraday high). The short term chart is forming a bullish flag pattern, but this could easily morph into a bearish head and shoulders, particularly on a retracement to the 4200 level.

This level remains key but there are some headwinds for the Aussie bourse, first and foremost the Shanghai Composite Index (SSEC)

As the chart above shows, the SSEC has stalled from its recent rally – which was pushed by the financial sector, as explained here by Data Diary.

The SSEC is in a long bear market, still some 60% down from its 2007 high and faces the same technical uphill battle as the ASX200, as it too is well below its long term moving average and recent high.

The only bullish drag is the US, now going through Q3 earnings season as I explained on this morning’s Chart of the Day. All eyes remain on Europe.

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. “The short term chart is forming a bullish flag pattern” certianly is. 4300 looks like some of the flimsiest resistance i have seen for a while. I would not be sleeping well as a shorter hoping this level holds and i would not be sleeping well sitting in cash praying this market comes back either.

    “this could easily morph into a bearish head and shoulders’ maybe but i reckon you are clutching at straws here sorry prince. H&S are major reversal patterns that form over months instead of weeks.
    your best hope is that its still just a bear market rally and it runs out of steam around 4500 after completing the 2nd leg up. by then though, all the sidelined investors will be back in so its hard to see how the market could fall.

  2. Yes GB, you are right about the broad definition of a reversal H and S – the most reliable are the longer term, spread over 8-16 (or more) weeks, but I’ve seen enough shorter term versions (and we are 4 weeks in) to note the possibility.

    But the bullish case is building, I’m not clutching at anything – but I can see the risks too.

    From a macro perspective, there is a very high chance this is just a bear market rally. Moreover, the probability of a sustained bull market (i.e going into 2012/13) is considerably below 50%.

    Only a Fool would not recognise this.

    • “the probability of a sustained bull market (i.e going into 2012/13) is considerably below 50%” totally i agree with this. actually im suprised you gave it a below 50% chance. i was thinking more like below 30%. but the point is its a chance none the less.

      this is the risk of being out of the market. my veiw, and you have to be prepared to admit you are wrong and cut losses if you need to, is to treat it as a new bull market. if its only a bear market rally you can always get back out. but if its a bull market you can not get back in.

      • “…if its only a bear market rally you can always get back out. but if its a bull market you can not get back in.”

        How’s that? You can always hop on a trend, if there’s no opportunity to do so then it was never really a trend in the first place, was it?