After a risk off evening, the S&P/ASX 200 Index fell at the open and broadly held on to losses today, down 1.42% or 59 points to 4193 points, continuining a six day reversal, and breaking its short term uptrend:
There is some support at the 4150 point mark, but it is likely the market will retrace back to the 4000 support level by following other undollar risk assets.
In after hours trading, the Australian SPI futures have fallen slightly and are trading at 4180 points.
Asian markets had a relatively better day, Japan’s Nikkei 225 is down 0.8% at 8577 points, the volatile Hang Seng down 0.8% to 18413 points, although the Shanghai Composite is now currently down over 1.5% or 35 points to 2256 points, confirming the breach of short term support, extending its medium term downtrend channel:
The US markets responded to the risk off attitude in Europe last night and were sold off almost 2% before rallying (as expected by The Lorax) in the afternoon, with the S&P500 closing down 1.5% to 1236 points, maintaining a position halfway through the price distribution of the October rally. There is also the sniff of another head and shoulders reversal pattern being formed on the weekly chart below, mirroring the pattern that presaged the dramatic sell off in August, with a trigger being a breach of the uptrend marked in green at approx. 1150 points:
Europe lead the risk off event with the UK FTSE the strongest, only down 1.8% to 5427 points, heading back to support at 5400, whilst the German DAX was down almost 3.4% to 5785 points, also heading back to support. Not a lot of strong buying…
The Euro (EUR/USD) extended the rout in undollar assets, jumping on the gas after decelerating its downtrend and now below its key September support level of 1.32, where it is currently trading at 1.3194:
Reflecting this the USD Index has seemingly returned to its double top just below 80 points at 79.45, confirming that US dollar strength will be a barometer to risk market weakness going forward.
The AUD also dices with USD parity, currently at 100.85 cents, whilst WTI crude also hovers under $100 a barrel, falling to $97.83 USD a barrel.
Gold was sold off again today, down over 0.5% or $8.50 an ounce during the Asian session, now at $1659 USD an ounce, where the head and shoulders bearish reversal pattern has tentatively broken the neckline. There is substantial support around $1600 an ounce where a brigade of Zero Hedge buyers stands ready to bid up their bunker inventories of the shiny metal. A break below $1600 however would be extremely bearish and probably alongside a general correction or crash in commodity prices.
In Australian dollars, gold has also fallen over $20 AUD an ounce and is now at $1640 AUD an ounce.
Movers and Shakers
Its the reverse of yesterdays move – all sectors but consumer staples were in the red today – with healthcare and energy stocks giving back the gains of yesterday.
Financials were down 1.4%, with all banks losing, ANZ down 1%, where it remains in a trading range between $19 and $22 per share, Commonwealth (CBA) also off 1%, where it remains in a downtrend channel stubbornly below $50 per share, National Australia Bank (NAB) the worst losing 2.5% maintaining its two year sideways funk, whilst Westpac (WBC) also lost over 2 percent dancing to the same sideways step.
Macquarie (MQG) also suffered broad losses, down 1.7% today, getting back to its depressed ways, whilst healthcare standout Cochlear (COH) gave back most of yesterday by dropping 3% in a joyous trading session for daytraders.
Its “twin” CSL fared almost as bad, losing 2% whilst Telstra (TLS) was relatively stable, only losing 0.3% on even stronger volume as it trend appears slightly overbought.
To the resources, with BHP Billiton (BHP) reversing all of yesterday, down nearly 2%, its “twin” Rio Tinto (RIO) similarly affected. Both remain at depressed levels and within medium term downtrends or channels, with RIO possibly forming a head and shoulders reversal on the weekly chart below (support at $62 a share is the key level to watch):
Gold miner Newcrest Mining (NCM) built on yesterday’s losses, over 1% down and has fallen below its support levels, reflecting the weakness in the USD and AUD gold price, whilst Fortescue (FMG) was sold off over 2.3%
Rounding out the ASX8, Woodside Petroleum (WPL) was smashed, losing 2.6% as it approaches its pre-QE2 lows:
Defensive stocks Wesfarmers (WES) and Woolworths (WOW) again had different days, the former down over 0.5%, the latter up 0.8% heading back to pre-August levels above $26 per share after bottoming out below $24 a share recently.