Trading Day – 14th February

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Well that could have been a Valentine’s Day Massacre if it wasn’t for the Bank of Japan announcing another round of QE – this time only $130 billion (in USD). The S&P/ASX 200 Index fell pretty much from the open absorbing the Moody’s downgrade of European sovereigns, losing over 1% before the BoJ announcement at 2.30pm before consolidating just above 4240 points:

This is a very tight trading range, where the market just refuses to break free and go over 4300 points to follow its outperforming US (and European) brethren:

Surfing XJO - imagine a Monty Python foot on the top of this market

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This theory continues to hold only in conjunction with US and European markets breaking new highs (more so the former), and indirectly (following the “risk-on” meme) the break in the long downtrend of the Shanghai Composite, thus allowing the ASX200 to reach for 4500-4700 points. Until then, we surf sideways.

Other Asian markets are mixed, with Japan’s Nikkei 225 jumping after the BoJ decision, up 0.6% to 9054, with the volatile Hang Seng currently flat and the Shanghai Composite currently down 16 points at 2335 points, dicing with its long term downtrend channel, but still in a dominant bear market trend.

The AUD has slipped below 1.07 against the USD, now at 1.068, whilst WTI crude fell 0.4% to still be over $100USD per barrel. Gold is slipping again and looking weaker by the day, down $5.60USD an ounce and settling at $1719USD an ounce, whilst in AUD terms the shiny metal is currently at $1607AUD an ounce, up $4 for the day.

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Gold (USD) is looking weak, even though above its 200 DMA, refuses to go above $1750USD an ounce


Movers and Shakers
Unicorn hunting season again, with all sectors except staples in the red, led by the usual “risk-off” suspects – energy, materials and industrials. Woolworths (WOW) surprised turning up over 1% against this sea of red, on no news, possibly speculation ahead of its earnings release but that’s not due until 1st March. Hmm.

Checking out the ASX8 (the top four banks and miners who collectively provided more than 90% of profit growth last year), it was a poor day for the banks, with ANZ slipping 0.4%, still above its 200 day moving average and building on its short term uptrend on the daily charts, whilst the big brother of banks, the Commonwealth (CBA) was down 0.6%, slipping below resistance level of $50 per share and remaining in a “bullish neutral” position.

But note how the recent breakout did not convince the market, which has resoundly sold the bank down to its long running $50 a pop price – well above its real value in my opinion, but we will have to wait until tomorrow to see what’s what:

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Analysts reckon CBA is worth $60-70 a share, I reckon $40, market does what it wants


National Australia Bank (NAB) lost most of yesterday’s 1.4% rise and is still neutral, whilst Westpac (WBC) was also down over 1%, below its 200 day moving average and also remaining in a neutral stance, but building a bullish case nonetheless. If the market breaks that is…

Quickly checking out Macquarie (MQG), the Millionaire Factory has corrected somewhat from its good breakout, down 2.4% but still above its long term moving average.

To the holes, where BHP Billiton (BHP) was down 1.3% – leading the market – and seems stuck for now as investors digest the macro and micro news around the Big Western Australian. Its “twin” Rio Tinto (RIO), also tumbled, down 1.6%, dicing with its 200 day moving average and rejecting resistance at $70 a share.

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Gold miner Newcrest Mining (NCM) was down 2% even as gold improved in AUD, its looking weaker by the day, and to finish out the ASX8, Woodside Petroleum (WPL) also was another “1 percent club” loser, taking back yesterday’s gains.

The overnight futures for the ASX200 are down 3 points to around 4240 while other equity futures are mixed, with significant data releases including US retail sales and French/German GDP numbers able to spook the markets, amongst the other noise and frivolity.

www.twitter.com/ThePrinceMB

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