The S&P/ASX 200 Index finished strongly today, finally turning a good open into a solid day, up 47 points or more than 1% at 4271 points.
The bourse stands at the each of completing the symmetrical triangle pattern, but still needs to clear the 4300 area, climbing above the 200 day moving average for this short term rally to continue as a technical bear market rally, with a probable target up to 4700 points, the mid-point of the higher trading range from 2009-mid 2011, and also the consensus target.
A reminder that we have been here before and failed (4 times in the last quarter of 2011), but some underlying stocks – namely Houses and Holes – point to a sustained bullish picture in the short-medium term. Read below for more.
Japan’s Nikkei 225 was up similarly to the local bourse, up 90 points or 1% to 8875 points, with Chinese markets still closed for the new year holiday.
The AUD remains strong, climbing above 1.05 against the USD again, currently at 1.0495 and building on its short term uptrend, having accelerated away, with resistance at 1.07 to clear very soon:
WTI crude remains flat, up 5 cents to remain at exactly $99 USD a barrel whilst gold was equally cautious, continuing its overnight tepidness in the Asian session, up $1 at $1665USD an ounce but down due to the high AUD to $1583 AUD per ounce.
Movers and Shakers
Is there reason to get excited? Today’s move seems to have been led by Westpac, which had a successful covered bond sale, and is reflected in the financial sector (which from a macro basis is FAR too large), up 2.1%, with daylight to the next sector, industrials, up 1.1%, with only utilities slipping today.
The banks have finally said something as investor’s brush off concern with funding costs, historically low credit growth and the “tapering” property markets, with most of the majors breaking out of their holding patterns today.
ANZ was up 2.2% and has broken out of its bullish rectangle pattern, with a target at resistance at $22 as shown on the daily chart below. The weekly chart (not shown) gives a medium term target of $25 per share.
The big brother of banks, the Commonwealth (CBA) also broke out, up almost 2.5% and above $50 a share, clearing this long running resistance level and the boundary of a long term downtrend channel, as seen on the weekly chart below:
National Australia Bank (NAB) was equally ebullient, just pipping over its 200 day moving average, but still technically holding neutral for now. You would expect it to follow its other 3 sisters soon enough, but stranger things have happened.
Finally Westpac (WBC), up a stonking 3.5%, although it has broken out of a short term rectangle base, with resistance at $21.70, is still technically neutral on the weekly charts, but for most, this should be enough of a trigger (remember, fear drives bull markets to start with, not greed which ends them) to get punters on board:
Going to Macquarie (MQG), I’ll stick with weekly charts because its clearer, as the Millionaire Factory appears to be following the big four, putting on over 4% today and breaking out from what looks like a double head and shoulder’s pattern on the weekly chart:
I suggested recently that on the daily chart, this was an ascending triangle, which has now completed with this breakout, but the 200 day moving average needs to be cleared (at around $27 per share) to firm up the bullish thesis.
On to my favourite stocks, as in what the market should be mostly made up of, with Cochlear (COH) falling almost 1% remaining just on trend whilst its “twin” CSL came back today, up just over 1%, remaining in a neutral stance, possibly bearish short term (particularly as the mismanaged AUD continues to rise?)
Volume finally returned to Telstra (TLS), possibly by yield seeking investors, as it went up 0.3%, looking like returning to trend (and violating my blow-off thesis, although it is below its third fan line still…)
To the resources, where BHP Billiton (BHP) climbed almost 1 percent to be just below its most recent high, and building on its breakout above resistance at $37 a share. If BHP clears $39 a share, the likelihood of a sustained rally to 4700 points on the ASX200 is increased substantially.
Sell on News report today on BHP shows the consensus is P/E compression on the major resources has been a little too harsh, and its seems the race is on to rebalance portfolios with the Big Australian.
Its “twin” Rio Tinto (RIO), finished exactly flat whilst gold miner Newcrest Mining (NCM) was up almost 1% building on a short term bullish flag pattern, clearing resistance at $33 per share, whilst Fortescue (FMG) was proving volatile again, falling over 1%, still in a medium term bearish stance.
To finish out the ASX8, Woodside Petroleum (WPL) remains flat, resisting climbing out of its sideways funk.
Tonight’s data is fairly light, with UK preliminary quarterly GDP numbers coming through, and US corporate earnings season rolls on, whilst locally its a day off (for some!) tomorrow, and the Chinese markets remain closed. The overnight futures for the ASX200 are up around 10 points to 4270 and other markets up similarly.